WT/DS353 /RW/Add.1  
 
9 June  2017 
(17-3039) Page: 1/141 
  Original: English  
 
 UNITED STATES – MEASURES AFFECTING T RADE IN  
LARGE CIVIL AIRCRAFT  (SECOND COMPLAINT)  
RECOURSE TO ARTICLE 21.5 OF THE DSU BY THE EU ROPEAN UNION  
REPORT OF THE PANEL  
Addendum  
This addendum  contains Annexes A to F to the Report of the Panel to be found in document 
WT/DS353 /RW. 
 
 
_______________  
 WT/DS353 /RW/Add.1  
 
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  LIST OF ANNEXES  
 
ANNEX A  
WORKING PROCEDURES O F THE PANEL  
Contents  Page  
Annex A -1 Working Procedures of  the Panel  A-2 
Annex A -2 Additional Working Procedures for the Protection of Business Confidential 
Information and  Highly Sensitive Business Information ("BCI/HSBI 
Procedures")  A-5 
Annex A -3 Procedures for the Partial Opening to the Public of the Meeting of the Panel  A-17 
ANNEX B  
ARGUMENTS OF THE EUR OPEAN UNION  
Contents  Page  
Annex B -1 Executive Summary of the first  written submission of the European Union  B-2 
Annex B -2 Executive Summary of the second written submission of the European Union  B-11 
Annex B -3 Executive Summary of the opening statement of the European  Union  at the 
Panel meeting  B-19 
Annex B -4 Executiv e Summary of the closing statement  of the European  Union  at the 
Panel meeting  B-24 
ANNEX C  
ARGUMENTS OF THE UNI TED STATES  
Contents  Page  
Annex C -1 Executive Summary of the first w ritten  submission of the United States  C-2 
Annex C -2 Executi ve Summary of t he second written submission of the United States  C-10 
Annex C -3 Executive Summary of the statement of the United States at the Panel meeting  C-18 
ANNEX D  
ARGUMENTS OF THE THI RD PARTIES  
Contents  Page  
Annex D -1 Executive Summary of the written submission  of Brazil  D-2 
Annex D -2 Executive Summary of the statement of Brazil at the Panel meeting  D-7 
Annex D -3 Executive Summary of the written submission of Canada  D-9 
Annex D -4 Executive Summary of the statement of Canada at the Panel meeting  D-13 
Annex D -5 Executive Summary of the written submission of Japan  D-17 
Annex D -6 Executive Summary of the statement of Japan at the Panel meeting  D-20 
Annex D -7 Executive Summary of the written submission of the Republic of Korea  D-23 
Annex D -8 Executive Summary of the statement of the Republic of Korea at the Panel 
meeting  D-27 
 WT/DS353/RW/ Add.1  
 
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  ANNEX E  
RULINGS OF THE PANEL  REGARDING ARTICLE 13  OF THE DSU  
Contents  Page  
Annex E -1 Preliminary Rulings and Decision Regarding Information -Gathering under 
Article 13 of the DSU dated 26 November 2012  E-2 
Annex E -2 Communication of the Panel dated 5 December 2012  E-14 
Annex E -3 Communication of the Panel dated 18 December 2012  E-15 
Annex E -4 Communication regarding third party rights dated 25 January 2013  E-17 
ANNEX F  
OTHER PROCEDUR AL RULINGS OF THE PA NEL 
Contents  Page  
Annex F -1 Decision regarding requests for certain information dated 23 October 2013  F-2 
 
 WT/DS353/RW/ Add.1  
 
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  ANNEX A  
WORKING PROCEDURES O F THE PANEL  
Contents  Page  
Annex A -1 Working Procedures of the Panel  A-2 
Annex A -2 Additional Wo rking Procedures for the Protection of Business Confidential 
Information and Highly Sensitive Business Information ("BCI/HSBI 
Procedures")  A-5 
Annex A -3 Procedures for the Partial Opening to the Public of the Meeting of the Panel  A-17 
 WT/DS353/RW/ Add.1  
 
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  ANNEX A -1 
WORKING  PROCEDURES OF THE PA NEL 
(amended 3 June 2013 ) 
1. In its proceedings the Panel shall follow the relevant provisions of the Dispute Settlement 
Understanding (DSU). In addition, the following working procedures shall apply.  
2. The Panel shall conduct its int ernal deliberations in closed session. The parties to the 
dispute, and interested third parties, shall be present at the meetings only when invited by the 
Panel to appear before it. The Panel may open its meeting with the parties to the public, subject to 
appropriate procedures to be adopted by the Panel after consulting with the parties. The Panel 
may open the third party session of its substantive meeting to the public, subject to appropriate 
procedures to be adopted by the Panel after consulting with the  parties and third parties.  
3. The deliberations of the Panel and the documents submitted to it shall be kept confidential. 
Nothing in the DSU shall preclude a party to a dispute from disclosing statements of its own 
positions to the public. Members shall treat as confidential information submitted by another 
Member to the Panel which that Member has designated as confidential. Where a party to a 
dispute submits a confidential version of its written submissions to the Panel, it shall also, upon 
request of a  Member, provide a non -confidential summary of the information contained in its 
submissions that could be disclosed to the public.  
4. The Panel shall adopt additional procedures for the protection of confidential information 
after consultation with the pa rties.  
5. Before the substantive meeting of the Panel with the parties to the dispute, the parties shall 
transmit to the Panel written submissions, and subsequently written rebuttals, in which they 
present the facts of the case and their arguments, and th eir counter -arguments, respectively. 
Third parties may transmit to the Panel written submissions after the first written submissions of 
the parties have been submitted but before the rebuttals of the parties are submitted.  
6. All third parties which have n otified their interest in the dispute to the Dispute Settlement 
Body shall be invited in writing to present their views during a session of the substantive meeting 
of the Panel set aside for that purpose. All such third parties may be present during the en tirety of 
that session.  
7. At its substantive meeting with the parties, the Panel will ask the European Union to present 
its case. Subsequently, and still at the same meeting, the Panel will ask the United States to 
present its point of view. The Panel the reafter will ask third parties to present their views at the 
separate session of the same meeting set aside for that purpose. The parties will then be allowed 
an opportunity for final statements, with the European Union presenting its statement first.  
8. The Panel may at any time put questions to the parties and to the third parties, and ask 
them for explanations either in the course of the substantive meeting with the parties and/or third 
parties, or in writing. Written answers to questions shall be submit ted by a date to be specified by 
the Panel.  
9. The parties and third parties shall make all submissions in a WTO working language. Where 
the original language of an exhibit or of text quoted in submissions or responses to questions is 
not a WTO working la nguage, the submitting party or third party shall submit a translation of the 
exhibit or text into a WTO working language at the same time as the original language version. 
The Panel may grant extensions of time for the translation of exhibits or text into  a WTO working 
language upon a showing of good cause. Any objection as to the accuracy of a translation shall be 
raised in writing and at the earliest possible moment. Any objection shall be accompanied by an 
explanation of the grounds of objection and, if  possible, an alternative translation.  WT/DS353/RW/ Add.1  
 
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  10. A party to the dispute shall make available to the Panel and the other party a written version 
of its oral statement not later than the first working day following the end of the meeting of the 
Panel at which the  oral statement was presented. Third parties to the dispute shall make available 
to the Panel, the parties and all other third parties a written version of their oral statements not 
later than the first working day following the end of the meeting of the P anel at which the oral 
statement was presented. Parties and third parties are encouraged to provide the Panel and other 
participants at the meeting with a provisional written version of their oral statements at the time 
that the statements are made.  
11. In the interest of full transparency, oral presentations by a party shall be made in the 
presence of the other party. Moreover, each party's submissions, including responses to questions 
put by the Panel, shall be made available to the other party. Submissi ons by third parties, 
including responses to questions put by the Panel, shall also be made available to the parties. 
Third parties shall receive copies of the parties' first written submissions and rebuttals.  
12. The parties shall provide the Secretariat  with executive summaries of the claims and 
arguments contained in their written submissions and oral presentations. The executive summaries 
of the first written submissions and rebuttal written submissions shall be limited to 10 pages each, 
and the execut ive summaries of the oral statements at the meetings shall be limited to 5 pages 
each. Third parties are requested to provide the Panel with executive summaries of their written 
submissions and oral statements, of no more than 5 pages each. The executive s ummaries shall 
not serve in any way as a substitute for the submissions of the parties and third parties in the 
Panel's examination of the case. Any executive summary shall be submitted to the Secretariat 
within ten days of the date on which the original s ubmission is submitted or the original oral 
statement is submitted in written form. Paragraph  20 shall apply to the service of executive 
summaries.  
13. The descriptive part of the Panel's report will include the procedural and factual background 
of the pr esent dispute. Description of the main arguments of the parties and third parties will 
consist of the executive summaries referred to in paragraph  12, which will be attached to the 
report of the Panel as annexes.  
14. Parties shall submit any requests for preliminary rulings not later than in their first written 
submissions to the Panel. Exceptions to this procedure may be granted upon a showing of good 
cause. The Panel shall establish a deadline for responses to any such requests after consultations 
with t he parties.   
15. Parties shall submit all factual evidence to the Panel no later than their first written 
submissions, other than evidence necessary for purposes of rebuttals and answers to questions. 
Exceptions to this procedure may be granted upon a sho wing of good cause. In such a case, the 
other party shall be accorded a period of time for comment on the newly submitted evidence, as 
the Panel deems appropriate.  
16. To facilitate the maintenance of the record of the dispute, and for ease of reference t o 
exhibits submitted by the parties, parties are requested to number their exhibits sequentially 
throughout the course of the dispute. For example, exhibits submitted by the United States should 
be numbered USA -1, USA -2, etc., and exhibits submitted by the  European Union should be 
numbered EU -1, EU -2, etc. If the last exhibit in connection with the first submission of the 
European Union, for example, was numbered EU -5, the first exhibit of the next submission thus 
would be numbered EU -6.  
17. The parties an d third parties may submit exhibits, and serve them on each other, as 
electronic files saved on CD -ROMs. If a party or third party chooses to submit exhibits as electronic 
files, it shall, in addition, submit three paper copies of such exhibits to the Secr etariat, and one 
paper copy of such exhibits to each party and third party.  
18. The parties and third parties to this proceeding have the right to determine the composition 
of their own delegations. The parties and third parties shall have responsibility for all members of 
their delegations and shall ensure that all members of their delegations act in accordance with the 
rules of the DSU and the Working Procedures of this Panel, particularly in regard to confidentiality WT/DS353/RW/ Add.1  
 
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  of the proceedings. Each party and t hird party shall provide a list of the members of its delegation 
before or at the beginning of the meeting with the Panel to the Secretary of the Panel, Mr. XX.  
19. Following the issuance of the interim report, the parties shall submit any written requests  to 
review precise aspects of the interim report within the deadlines established in the timetable. 
Following receipt of any written request for review, each party shall submit any written comments 
on the other party's written request for review within the  deadlines established in the timetable. 
Such comments shall be strictly limited to commenting on the other party's written request for 
review.  
20. The following procedures regarding service of documents shall apply:  
a. Each party shall serve its submissio ns directly on the other party. Each party shall, in 
addition, serve its submissions to the substantive meeting of the panel on the third 
parties. Each third party shall serve its submissions on the parties and all other third 
parties. Each party and third  party shall confirm in writing that copies have been 
served as required, at the time it provides each submission to the Panel.  
b. The parties and third parties shall provide their submissions to the Secretariat by 
5:30 p.m. (Geneva time) on the due dates  established by the Panel, unless a different 
time is set by the Panel.  
c. Each party and third party shall provide the Panel with eight (8) paper copies of all 
documents submitted to the Panel. Where a party or a third party submits exhibits as 
electronic  files on CD -ROMs, it shall provide to the Panel four (4) CD -ROMS containing 
such files, as well as one (1) paper copies. All of these copies shall be filed with the 
Dispute Settlement Registrar, Mr. XX (office number xxxx).  
d. Each party and third party shall also provide to the Panel an electronic version of all 
documents at the time that it provides the paper copies, in a format compatible with 
that used by the Secretariat, either on a CD -ROM or diskette or as an e -mail 
attachment. E -mail attachments sh all be sent to the Dispute Settlement Registry 
(xxxx@wto.org), with copies to  XXXX . If the electronic version is provided by diskette 
or CD -ROM, four (4) copies shall be delivered to Mr. XX (office number xxxx).  
e. The Panel will endeavour to provide the parties with an electronic version of the 
descriptive part, the interim report and the final report, as well as of other documents 
as appropriate. When the Panel transmits to the parties or third parties both paper 
and electronic versions of a document, th e paper version shall constitute the official 
version for the purposes of the record of the dispute.  
 
 WT/DS353/RW/ Add.1  
 
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  ANNEX A -2 
ADDITIONAL WORKING P ROCEDURES FOR THE PR OTECTION OF  
BUSINESS CONFIDENTIA L INFORMATION AND HI GHLY  
SENSITIVE BUSINESS I NFORMATION  
("BCI/HSBI PROCEDURES")  
(18 December  2012)  
I.  GENERAL  
The following Procedures apply to all business confidential information ("BCI") and highly sensitive 
business information ("HSBI") on the Panel record. These Procedures do not diminish the rights 
and obligations of the parties to request and disclose any information within the scope of the 
SCM Agreement  and Article 13 of the DSU.  
 
II.  DEFINITIONS  
For the purposes of these Procedures,  
 
1. "Approved Persons"  means Representatives or Outside Advisors of a Party, w hen 
designated in accordance with these procedures.  
2. "Business Confidential Information"  or "BCI" means any business information 
regardless of whether contained in a document provided by a public or private body that a Party or 
Third Party has "Designate d as BCI" because it is not otherwise available in the public domain and 
its disclosure could, in the Party's or Third Party's view, cause harm to the originators of the 
information. Each Party and Third Party shall act in good faith and exercise restraint  in designating 
information as BCI, and will endeavour to designate information as BCI only if its disclosure would 
cause harm to the originators of the information.  
3. "Conclusion of the Panel Process"  means the earliest to occur of the following events:  
a. pursuant to Article 16.4 of the DSU, the Panel report is adopted by the DSB, or the 
DSB decides by consensus not to adopt the Panel report;  
b. a Party formally notifies the DSB of its decision to appeal pursuant to Article 16.4 of 
the DSU;  
c. pursuant  to Article 12.12 of the DSU, the authority for establishment of the Panel 
lapses; or  
d. pursuant to Article 3.6 of the DSU, a mutually satisfactory solution is notified to 
the DSB. 
4. "Designated as BCI"  means:  
a. for printed information, text that is se t off with bold square brackets in a document 
clearly marked with the notation 'BUSINESS CONFIDENTIAL INFORMATION' and with 
the name of the Party or Third Party that submitted the information;  
b. for electronic information, characters that are set off wit h bolded square brackets (or 
with a heading with bolded square brackets on each page) in an electronic file that 
contains the notation 'BUSINESS CONFIDENTIAL INFORMATION', has a file name that 
contains the letters "BCI", and is stored on a storage medium w ith a label marked 
'BUSINESS CONFIDENTIAL INFORMATION' and indicating the name of the Party or 
Third Party that submitted the information; and  WT/DS353/RW/ Add.1  
 
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  c. for uttered information, declared by the speaker to be "Business Confidential 
Information" prior to utterance .1 
d. in case either Party objects to the designation of info rmation as BCI under 
paragraphs  4. a-c, the dispute shall be resolved by the Panel. If the Panel disagrees 
with designation of information as BCI, the submitting Party or Third Party may either 
designate it as non -BCI or withdraw the information. The Panel shall either destroy 
such information or return it to the submitting Party or Third Party. Each Party or 
Third Party may at any time designate as non -BCI information previously designated 
by tha t Party or Third  Party as BCI.  
This paragraph shall apply to all submissions, including exhibits, by a Party or Third Party.  
 
5. "Designated as HSBI"  means:  
a. for electronic information, in characters that are set off with double bolded square 
brackets (o r a heading with double bolded square brackets on each page) in an 
electronic file that contains the notation 'HIGHLY SENSITIVE BUSINESS 
INFORMATION', has a file name that contains the letters "HSBI", and is stored on a 
storage medium with a label marked ' HIGHLY SENSITIVE BUSINESS INFORMATION' 
and indicating the name of the Party or Third Party that submitted the information; 
and  
b. for uttered information, declared by the speaker to be "Highly Sensitive Business 
Information" prior to utterance.2  
This par agraph shall apply to all submissions, including exhibits, by a Party or Third Party.  
 
6. "Electronic information"  means any information stored in an electronic form (including 
but not limited to binary -encoded information).  
7. "Highly Sensitive Business I nformation"  or "HSBI" means any business information 
regardless of whether contained in a document provided by a public or private body that a Party or 
Third Party has "Designated as HSBI" because it is not otherwise available in the public domain 
and its disclosure could, in the Party's or Third Party's view, cause exceptional harm to its 
originators. Each Party and Third Party shall act in good faith and exercise the utmost restraint in 
designating information as HSBI. Each Party and Third Party may at an y time designate as non -
BCI/HSBI or as BCI information designated by that Party or Third Party as HSBI.  
a. The following categories of information may be Designated as HSBI:  
i. information indicating the actual selling or offered price of any large civil aircraft 
(LCA) manufacturer's products or services3, and, exc ept as provided in 
subparagraph  7. d.i.  below, any graphs or other use of the data which reflect 
the movement of prices, pricing trends or actual prices of an LCA model or a 
family of LCA;  
ii. information gathered or produced in the context of LCA sales campaigns;  
                                               
1 The erroneous failure by a speaker to make such a prior declaration shall not affect the designation of 
the BCI in question.  
2 The erroneous failure by a speaker to make such a prior declaration sha ll not affect the designation of 
the HSBI in question.  
3 This category includes (but is not limited to) information on individual LCA prices, prices per seat, or 
information allowing the operating cost per seat of an LCA to be determined, calculated or ref lected; the 
negotiated or offered prices for the airframe; all concessions offered or agreed to by an LCA manufacturer 
including financing, spare parts, maintenance, pilot training, asset value and other guarantees, buy back 
options, remarketing arrangemen ts or other forms of credit support.  This category shall also include the actual 
pricing information relating to any number of individual LCA offers and prices (including concessions) 
aggregated by model or other category.  WT/DS353/RW/ Add.1  
 
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  iii. information concerning market forecasts, analyses, business plans and 
share/business valuations generated by LCA producers, consultants, or 
investment banks with regard to LCA pro ducts; or  
iv. information concerning an LCA manufacturer's costs of production, including but 
not limited to data regarding pricing by suppliers.  
b. Each Party and Third Party may also Designate as HSBI other categories of business 
information that is not otherwise available in the public domain and the disclosure of 
which could, in the Party's view, cause exceptional harm to its originators.   
c. Each Party and Third Party shall Designate as HSBI any inform ation described in 
subparagraph  7.a. that pertains  to LCA produced by an LCA manufacturer 
headquartered within the territorial jurisdiction of either of the Parties.  
d. The following categories of information may not be Designated as HSBI:  
i. aggregated pricing data for a particular LCA model or family of LCA within a 
particular market that is indexed (i.e., does not reflect actual prices but rather 
movements in prices off a base of 100 for a particular year). Such data shall be 
treated as BCI;  
ii. general legal conclusions based on HSBI (e.g., that HSB I demonstrates that a 
producer engaged in price undercutting). Such conclusions shall be treated as 
neither BCI nor HSBI;  
iii. intergovernmental agreements and government decisions, other than 
information described in subparagraph  7.a. 
e. Information may not be Designated as HSBI simply because it is subject to bank 
secrecy or banker -client confidentiality.  
f. In case either Party objects to the designation of infor mation as HSBI under 
paragraphs  7.a-e, the dispute shall be resolved by the Panel. If the P anel disagrees 
with designation of information as HSBI, the submitting Party or Third Party may 
either designate it as BCI, as non -BCI/HSBI or withdraw the information. The Panel 
shall either destroy such information or return it to the submitting Party or  Third 
Party. Each Party or Third Party may at any time designate as non -BCI/HSBI or as BCI 
information previously designated by that Party or Third  Party as HSBI.   
8. "HSBI Approved Person"  means Approved Persons specifically designated by the Parties 
as having the right to access HSBI (according to the procedures laid down in Section  IV). 
9. "HSBI location"  means a room to be kept locked when not occupied and the access to 
which shall be possible only for HSBI Approved Persons, located:   
a. for HSBI subm itted by the United States, on the premises of (i) the United States 
Mission to the European Union in Brussels and (ii) the Office of the United States 
Trade Representative in Washington, DC;  
b. for HSBI submitted by the European Union, on the premises of the Delegation of the 
European Union to the United States in Washington, DC and (ii) the Directorate 
General for Trade of the European Commission in Brussels;  
c. for HSBI submitted by a Third Party, on the premises of its Geneva Mission to the 
WTO.  
10. "Locked CD"  means a CD -ROM that is not rewritable.  
11. "Outside Advisor"  means a legal counsel or other advisor of a Party or Third Party, who:  WT/DS353/RW/ Add.1  
 
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  a. advises a Party or Third Party in the course of the dispute;  
b. is not an employee, officer or agent of an enti ty or an affiliate of an entity engaged in 
the manufacture of LCA, the provision of supplies to an entity engaged in the 
manufacture of LCA, or the supply of air transportation services; and  
c. is subject to an enforceable code of professional conduct that  includes an obligation to 
protect confidential information, or has been retained by another outside advisor who 
assumes responsibility for compliance with these procedures and is subject to such a 
code of professional conduct.  
For purposes of this paragr aph, outside legal counsel representing an LCA producer headquartered 
in the territory of one of the Parties or Third Parties in  connection with these proceedings or 
outside consultants who have been retained by such counsel to provide advice with regard t o these 
proceedings are not considered agents of an entity listed in subparagraph  b. 
 
12. "Panel" means the DS353 compliance panel composed on 30 October 2012.  
13. "Party"  means the European Union or the United States.  
14. "Party -BCI" means BCI originally submitted by a Party.  
15. "Representative"  means an employee of a Party or Third Party.  
16. "Sealed laptop computer"  means a laptop computer having (software and hardware) 
characteristics considered necessary by the submitting Party for protection of that  HSBI, provided 
that it has software installed that permits such HSBI to be searched and printed in accordance with 
the provisions of Section  VI. However, HSBI may not be edited on the sealed laptop computer.  
17. "Secure site"  means a facility to be kept l ocked when not occupied and the access to which 
shall be possible only for Approved Persons, located:  
a. in the case of the European Union, the offices of WTO Team of the Legal Service of the 
European Commission (Rue de la Loi 200, Brussels, Belgium), the  offices of 
Directorate General for Trade of the European Commission (Rue de la Loi 170, 
Brussels, Belgium), the offices of the Permanent Mission of the European Union to the 
International Organisations in Geneva (Rue du Grand -Pré 66, 1202 Geneva, 
Switzerl and), and three additional sites specified in accordance with subparagraph  (c); 
b. in the case of the United States, the offices of the General Counsel of the Office of the 
United States Trade Representative (600 17th Street, NW, Washington, DC, USA), the 
offices of the Import Administration, United States Department of Commerce (600 
17th Street, NW, Washington, DC, USA), the Mission of the United  States to the World 
Trade Organization (11, route de Pregny, 1292 Chambésy, Switzerland), and three 
additional sites specified in accordance with subparagraph  (c); and  
c. three sites other than a government office that are designated by each Party for use 
by its Outside Advisors; provided that the identity of those sites has been submitted 
to the other Party and th e Panel, and the other Party has not objected to the 
designation of that site within ten days of such submission.  
d. Any objections raised under subparagraph (c) may be resolved by the Panel.  
18. "Stand -alone computer"  means a computer that is not connecte d to a network.  
19. "Stand -alone printer"  means a printer that is not connected to a network.   
20. "Submission"  means any written, electronic, or uttered information transmitted to the 
Panel, including but not limited to, correspondence, written submission s, exhibits, oral statements, 
and answers to questions.  WT/DS353/RW/ Add.1  
 
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  21. "Third party" means a Member having notified its interest in the dispute to the DSB 
pursuant to DSU Article 10.  
22. "Third Party BCI Approved Person"  means a representative or Outside Advisor of a  
third party granted access to BCI pursuant to paragraphs 29, 36, 37 and 43.  
23. "WTO Approved Persons "  means the Panel members, PGE members or experts 
appointed by the Panel who in the opinion of the Panel require access to BCI, and persons 
employed or a ppointed by the Secretariat who have been authorized by the Secretariat to work on 
the dispute (and includes translators and interpreters as well as any transcribers present at Panel 
meetings involving BCI and/or HSBI).  
24. "WTO Reading Room"  means a room,  located on the premises of the WTO, which a Third 
Party BCI Approved Person may use to access a Party's submission that contains Party BCI.  
25. "WTO Rules of Conduct"  means the Rules of Conduct for the Understanding on Rules and 
Procedures Governing the Settlement of Disputes, as adopted by the DSB on 3 December 1996 
(WT/DSB/RC/1).  
III.  SCOPE  
26. These procedures apply to all BCI and HSBI received by an Approved Person and by WTO 
Approved Persons as a result of the Panel process, and to all BCI reviewed,  in accordance with 
these procedures, by a Third Party BCI Approved Person.  
27. Unless specifically otherwise provided herein, these procedures do not apply to a Party's or 
Third Party's treatment of its own BCI and HSBI.  
IV.  DESIGNATION OF APPRO VED PER SONS  
28. At the latest on 12:00 p.m. (noon) on 21 December 2012, each Party shall submit to the 
other Party and Third Parties, and to the Panel, a list of the names and titles of any 
Representatives and Outside Advisors who need access to BCI submitted by the other Party and/or 
Third Parties and whom it wishes to have designated as Approved Persons, along with any clerical 
or support staff that would have access to the BCI. On that list, each Party shall indicate which 
Approved Persons need access to HSBI s ubmitted by the other Party and/or Third Parties and 
whom it wishes to have designated as HSBI Approved Persons. Each Party may submit 
amendments to their list of Approved Persons by submitting such amendments to the other Party 
and Third Parties, and to t he Panel.  
29. There shall be no Third Party HSBI Approved Persons. The designation of Third Party BCI 
Approved Persons shall be governed by paragraphs 36 and 37. 
30. Each Party shall keep the number of Approved Persons as limited as possible. Each Party 
may designate no more than a total of 30 Representatives and 20 Outside Advisors as "HSBI 
Approved Persons".  
31. WTO Approved Persons  shall have access to BCI. The Director -General of the WTO, or his 
designee, shall submit to the Parties and Third Parties, and to the Panel, a list of the WTO 
Approved Persons and shall identify which of those WTO Approved Persons shall additionally have 
access to HSBI.  
32. Unless a Party objects to the designation of an Outside Advisor of the other Party, the Panel 
shall desi gnate those persons as Approved Persons. A Party also may object within ten days of 
becoming aware of information that was not available to the Party at the time of the f iling of a list 
under paragraph  28 that would suggest that designation of an individua l is not appropriate. If a 
Party objects, the Panel shall decide on the objection within ten  working days.  
33. An objection may be based on the failure to satisfy the definition of "Outside Advisor" or on 
any other compelling basis, including conflicts of interest.  WT/DS353/RW/ Add.1  
 
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  34. The Parties or the Director -General of the WTO, or his designee, may submit amendments to 
their lists at any time, subject to the overall limits set out in paragraph 30 and to objections for 
the addition of new Approved Persons in accordance  with paragraphs 32 and 33. 
V.  BCI 
35. Only Approved Persons, WTO Approved Persons and Third Party BCI Approved Persons may 
have access to BCI submitted in this proceeding. Third Party BCI Approved Persons may not have 
access to Party -BCI other than that included in the submissions. Approved Persons, WTO Approved 
Persons and Third Party BCI Approved Persons shall use BCI only for the purposes of this dispute. 
No Approved Person or WTO Approved Person shall disclose BCI, or allow it to be disclosed, to any 
person except another Approved Person, WTO Approved Person or Third Party BCI Approved 
Person. No Third Party BCI Approved Person shall disclose BCI, or allow it to be disclosed, to any 
person except another Approved Person, WTO Approved Person or Third Pa rty BCI Approved 
Person. These obligations apply indefinitely.  
36. Each Third Party that wants to access Party -BCI contained in the first or rebuttal submission 
of a Party shall submit to the other Party and Third Parties, and to the Panel, a list of the n ames 
and titles of any Representatives and Outside Advisors (including clerical or support staff) who 
need access to such BCI and whom it wishes to have designated as Third Party BCI Approved 
Persons. Each Third Party shall keep the number of Third Party B CI Approved Persons as limited as 
possible. Each Third Party may designate no more than a total of 5 Representatives and Outside 
Advisors as Third Party BCI Approved Persons.  
37. Unless a Party objects to the designation of an Outside Advisor of a Third Pa rty, the Panel 
shall designate those persons as Third Party BCI Approved Persons. A Party also may object within 
ten days of becoming aware of information that was not available to the Party at the time of the 
filing of a list under paragraph  36 above that  would suggest that designation of an individual is not 
appropriate. If a Party objects, the Panel shall decide on the objection within ten working days. An 
objection may be based on the failure to satisfy the definition of "Outside Advisor" or on any othe r 
compelling basis, including conflicts of interest.  
38. A Party shall make no more than one copy of any BCI submitted by the other Party or a 
Third Party for each Secure site provided for that Party in paragraph  17. 
39. Parties may incorporate BCI in int ernal memoranda for the exclusive use of Approved 
Persons. Any memorandum and the BCI it contains shall be mark ed in accordance with 
paragraph  4. 
40. BCI submitted by Approved Persons or by Third Party BCI Approved Persons pursuant to 
these procedures shal l not be copied, distributed, or removed from the Secure site, except as 
necessary for submission to the Panel.  
41. The treatment in a Party's submissions to the Panel of any BCI shall be governed by the 
provisions of this paragraph, which shall prevail t o the extent of any conflict with the other 
provisions of the Working Procedures (including these Procedures) relating to BCI.  
a. Parties may incorporate BCI in submissions to the Panel, mar ked as indicated in 
paragraph  4. In exceptional cases, parties ma y include BCI in an appendix to a 
submission.  
b. A Party submitting a submission or appendix containing BCI shall also submit, within a 
time period to be set by the Panel, a version redacting any BCI. This shall be referred 
to as the "Non -BCI Version". Ho wever, a Party is not required to submit a "Non -BCI 
Version" of any exhibit containing BCI, unless specifically directed to do so by the 
Panel;  
c. A Non -BCI Version shall be sufficient to permit a reasonable understanding of its 
substance. In order to pre pare such a Non -BCI Version:  WT/DS353/RW/ Add.1  
 
- A-11 - 
 
  i. A Party may request the Party that originally submitted the BCI, as soon as 
possible, to indicate with precision portions of documents containing BCI that 
may be included in the non -BCI Version and, if necessary to permit a 
reasonable understanding of the substance of the information, produce a Non -
BCI summary in sufficient detail to achieve this aim.  
ii. Upon receipt of such a request, the Party that originally submitted the BCI shall, 
as soon as possible, indicate with pre cision portions of documents containing 
BCI that may be included in the Non -BCI Version and, if necessary to permit a 
reasonable understanding of the substance of the information, produce a Non -
BCI summary in sufficient detail to achieve this aim.  
iii. The Panel shall resolve any disagreement as to whether the Party that originally 
submitted the BCI failed to indicate with sufficient precision portions of 
documents containing BCI that may be included in the Non -BCI Version and to 
produce, if necessary, a No n-BCI summary in sufficient detail to permit a 
reasonable understanding of the substance of the information, and may take 
appropriate action to ensure that the provisions of this paragraph are satisfied.  
d. The responding Party may designate the personal o ffices of up to four of its Approved 
Persons as additional Secure sites for the sole purpose of storing and permitting 
review of the BCI versions of the Parties' submissions to the Panel. All of the 
protections applicable to BCI under these procedures, inc luding the storage rules in 
Paragraph  45, shall apply to such submissions. BCI exhibits to submissions may not 
be stored or reviewed at these additional Secure sites. The responding Party shall 
submit the address (including room number) of each of the addi tional Secure sites to 
the Panel and the complaining Party.  
42. Any document containing BCI shall not be copied in excess of the number of copies required 
by the Approved Persons. All copies of such documents shall be consecutively numbered. The 
making of electronic copies shall be avoided whenever possible. Such documents may be 
transmitted electronically only by using secure e -mail. If a Party or Third Party submits to the 
Panel an original document that cannot be transmitted electronically, it shall on t he day of 
submission deliver a copy of that document to one of the S ecure sites listed in paragraph  17. The 
Parties shall designate one of the S ecure sites listed in paragraph  17 for this purpose.  
43. Notwithstanding paragraph 20 of the Working Procedures4, the following procedures apply to 
the access by Third Parties to a Party's submission that contains Party -BCI. 
a. A Party's Submission containing Party -BCI shall not be serviced to Third Parties unless 
both Parties agree otherwise.  
b. Third Party BCI App roved Persons may view Party -BCI contained in a Party's first 
written submission only in a Secure site or in the WTO Reading Room. Third Party BCI 
Approved Persons may not bring into such room any electronic recording or 
transmitting devices. Third Party B CI Approved Persons may not remove a Party's 
Submission containing Party -BCI from such room, but may take handwritten notes of 
the Party -BCI contained therein. Such notes shall be used exclusively for this dispute 
(that is, DS353). Each person viewing a Pa rty's Submission containing Party -BCI shall 
complete and sign a log identifying the submission the person reviewed. The Party 
responsible for maintaining the particular Secure site, and the WTO Secretariat in the 
case of the WTO Reading Room, shall maintai n such log until one year after the 
Conclusion of the Panel Process . Before entering and when leaving the room, Outside 
Advisors who are Third Party BCI Approved Persons may be subject to appropriate 
controls.  
c. If a Third Party BCI Approved Person remov es from the Secure site or the WTO 
Reading Room a handwritten memo in accordance with subparagraph  43 b.  above, 
that Third Party BCI Approved Person shall store the memo only in a locked security 
                                               
4 Concerning service of document s. WT/DS353/RW/ Add.1  
 
- A-12 - 
 
  container. Such memo shall be appropriately protected agains t improper inspection 
and eavesdropping when being consulted and will be transmitted in sealed heavy duty 
double envelopes only. The content of such memo shall not be incorporated, 
electronically or in handwritten form, into the Non -BCI Version, as defined  in 
paragraph  41 b.   
d. All Third Parties that have designated Third Party BCI Approved Persons must inform 
the Parties of the identity of the specific room (including the address and the room 
number) in which the locked security container,  as referred to  in subparagraph  c. 
above, is located.  
e. If a Third Party BCI Approved Person removes from the Secure site or the WTO 
Reading Room a handwritten memo in accordance with subparagraph  43 b. above, 
such memo shall not be copied in excess of the number of cop ies required by the 
Third Party BCI Approved Persons. All copies of such documents shall be consecutively 
numbered. The making of electronic copies of such memo shall be prohibited.  
f. A Third Party may not incorporate into the body of its submission any Party-BCI. If a 
Third Party wishes to refer to any Party -BCI, the relevant arguments including such 
BCI should be incorporated into a separate Appendix. Such Appendix shall not be 
serviced to other Third Parties.  
g. On the date determined by the Panel as the deadline to make the Third Party 
submission, a Third Party shall service its submission only to the Parties and to the 
Panel. The submission shall be serviced to the other Third Parties only after the 
Parties have confirmed that the submission does not  contain or disclose Party -BCI. 
A Party shall make this confirmation or otherwise advise of any necessary change to 
the relevant Third Party within 2 working days of receiving the submissions of 
Third Parties.   
44. A Party or Third Party that wishes to su bmit or refer to BCI at a Panel meeting shall so 
inform the Panel and the other Party, and Third Parties as appropriate. The Panel shall exclude 
persons who are not Approved Persons, WTO Approved Persons or, as appropriate, Third Party BCI 
Approved Persons  from the meeting for the duration of the submission and discussion of BCI.  
45. Approved Persons and WTO Approved Persons shall store BCI only in locked security 
containers. In the case of BCI submitted to the Panel, such locked security containers shall b e kept 
on the WTO Secretariat's premises, except that Panel members may maintain a copy of all 
relevant documents and materials containing BCI at their places of residence. Such documents and 
materials shall be stored in locked security containers when not  in use. BCI shall be appropriately 
protected against improper inspection and eavesdropping when being consulted and will be 
transmitted in sealed heavy duty double envelopes only. All work papers ( e.g., draft submissions, 
worksheets, etc.) containing BCI shall, when no longer needed, be shredded or burned consistent 
with normal government practice for destroying sensitive documents.  
46. The Panel shall not disclose BCI in its report, but may make statements or draw conclusions 
that are based on the inform ation drawn from the BCI.  
VI.  HSBI  
47. Unless otherwise provided below, HSBI shall be subject to all the restrictions in Section  V 
applicable to BCI.  
48. HSBI shall be submitted to the Panel in electronic form, using locked CDs or two Sealed 
laptop comp uters connectable to 19" - 21" monitors, or in hard copy form, for access by WTO 
Approved Persons d esignated pursuant to paragraph  31 as being additionally authorized to access 
HSBI. All such HSBI shall be stored in a combination safe in a designated secur e location on the 
premises of the WTO Secretariat. Any computer in that room shall be a Stand -alone computer. 
WTO Approved Persons d esignated pursuant to paragraph  31 as being additionally authorized to 
access HSBI may view HSBI only in the designated secu re location referred to above. A Stand -
alone printer may be used to make hard copies of any HSBI. Such hard copies shall be made on WT/DS353/RW/ Add.1  
 
- A-13 - 
 
  distinctively colored paper. Such hard copies shall either be stored in a combination safe at the 
designated secure location  referred to above, or destroyed at the end of the relevant working 
session. HSBI shall not be removed from this designated secure location, except (i) in the form of 
handwritten notes that may be used only on the WTO Secretariat's premises and which shall  be 
destroyed once no longer in use; and (ii) subject to appropriate precautions, for purposes of 
meetings of the Panel with the Parties and any internal deliberations of the Panel, as provided for 
in paragraph  57 j.  
49. Each Party shall maintain an addit ional copy (electronic or hard) of the HSBI it submits to 
the WTO, for access by HSBI Approved Persons acting on behalf of the other Party, in the HSB I 
locations listed in paragraph  9. A Stand -alone printer may be used to make hard copies of any 
HSBI. Such  hard copies shall be made on distinctively colored paper. Such hard copies shall either 
be stored in a safe at the relevant HSBI location, or destroyed at the end of the relevant working 
session.  
50. If a Third Party submits HSBI, it shall notify the Par ties of the fact that such submission has 
been made. Each Third Party submitting HSBI shall maintain an additional copy (electronic or 
hard) of the HSBI it submits to the WTO, for access by HSBI Approved Persons acting on behalf of 
the Parties, in the HS BI location listed in paragraph  9. A Stand -alone printer may be used to make 
hard copies of any HSBI. Such hard copies shall be made on distinctively colored paper. Such hard 
copies shall either be stored in a safe at the relevant HSBI location, or destroyed  at the end of the 
relevant working session.  
51. Except as otherwise provided in these procedures, HSBI shall not be stored, transmitted or 
copied either in written or electronic form.  
52. HSBI Approved Persons may view HSBI on the Sealed laptop computer m aintained by the 
other Party or a Third Party or, in the case of HSBI submitted on Locked CDs on a Stand -alone 
computer, only in a designated room at one of the HSBI locations indicated in paragraph  9, or at 
the designated secure location on the premises o f the WTO Secre tariat referred to in 
paragraph  48, unless otherwise mutually agreed by the Parties. The designated room shall be 
available to HSBI Approved Persons from 9:00 a.m. to 5:00  p.m. during official working days at 
the respective HSBI location. Th e designated secure lo cation referred to in paragraph  48 shall be 
available to HSBI Approved Persons by prior arrangement with the WTO Secretariat. HSBI 
Approved Persons may not bring into such room any electronic recording or transmitting devices. 
HSBI Ap proved Persons may not remove HSBI from such room, except in the form of handwritten 
notes or aggregated information generated on a Stand -alone computer. In either case, such notes 
or information shall be used exclusively for this dispute in connection wit h which the HSBI has 
been submitted. Each person viewing the HSBI in the HSBI location or designated secure loc ation 
referred to in paragraph  48 shall complete and sign a log identifying the HSBI that the person 
reviewed or, alternatively, such a log can b e generated automatically. Each Party shall, for the 
HSBI location within its territory referenced in paragraph  9, maintain such log until one year after 
the Conclusion of the Panel Process . The WTO Secretariat shall, for the designated secure location 
referred to in paragraph  48, maintain such log until one year after the Conclusion of the Panel 
Process. Before entering and when leaving such room, Outside Advisors who are HSBI Approved 
Persons may be subject to appropriate controls.  
53. No HSBI Approved Pe rson or WTO Approved Person d esignated pursuant to paragraph  31 as 
being additionally authorized to access HSBI shall disclose HSBI to any person except another 
HSBI Approved Person or WTO Approved Person d esignated pursuant to paragraph  31 as being 
additi onally authorized to access HSBI, and then only for the purpose of this dispute. This 
obligation applies indefinitely.  
54. HSBI may be processed only on Stand -alone computers. Any memorandum containing HSBI 
shall not be transmitted electronically, whether by e-mail, facsimile, or otherwise.  
55. A Party or Third Party that wishes to submit or refer to HSBI at a Panel meeting shall so 
inform the Panel and the other Party, and Third Parties as appropriate. The Panel shall exclude 
persons who are not HSBI Appr oved Persons or WTO Approved Persons d esignated pursuant to 
paragraph  31 as being additionally authorized to access HSBI from the meeting for the duration of 
the submission and discussion of HSBI.  WT/DS353/RW/ Add.1  
 
- A-14 - 
 
  56. All HSBI shall be stored in a safe at the relevant HSBI  location or in accordance with 
paragraph  48. 
57. The treatment in a Party's submissions to the Panel of any HSBI shall be governed by the 
provisions of this paragraph, which shall prevail to the extent of any conflict with the other 
provisions of the Work ing Procedures (including these Procedures) relating to HSBI.  
a. HSBI may be incorporated into a separate appendix to, but not the body of, a Party's 
submission, which appendix shall be comprehensible in itself. The document 
containing the HSBI shall be r eferred to as the "Full HSBI Version Appendix";  
b. A Party submitting an appendix containing HSBI shall also submit, within a time 
period to be set by the Panel, a version redacting any HSBI. This shall be referred to 
as the "Redacted Version Appendix";  
c. At the request of a Party, information contained in the Redacted Version Appendix 
may be treated as BCI, in accordance with the provisions of Section  V;  
d. A Redacted Version Appendix shall be sufficient to permit a reasonable understanding 
of its subst ance. In order to prepare such a Redacted Version Appendix:  
i. A Party may request that the Party that originally submitted the HSBI, as soon 
as possible, indicate with precision portions of documents containing HSBI that 
may be included in the Redacted Ve rsion Appendix and, if necessary to permit a 
reasonable understanding of the substance of the information, produce a non -
HSBI summary in sufficient detail to achieve this  aim. 
ii. Upon receipt of such a request, the Party that originally submitted the HSBI  
shall, as soon as possible, indicate with precision portions of documents 
containing HSBI that may be included in the Redacted Version Appendix and, if 
necessary to permit a reasonable understanding of the substance of the 
information, produce a non -HSBI summary in sufficient detail to achieve 
this aim. 
iii. The Panel shall resolve any disagreement as to whether the Party that originally 
submitted the HSBI failed to indicate with sufficient precision portions of 
documents containing HSBI that may be includ ed in the Redacted Version 
Appendix and to produce, if necessary, a non -HSBI summary in sufficient detail 
to permit a reasonable understanding of the substance of the information, and 
may take appropriate action to ensure that the provisions of this paragr aph are 
satisfied.  
e. The Full HSBI Version Appendix shall be kept in an HSBI location and in the 
designated secure location referred to in paragraph  48, as appropriate, in the form of 
a locked CD. If it is not practical to keep the Full HSBI Version Appen dix in an HSBI 
location, the Party may keep it in a locked security container in a Secure site in the 
form of a locked CD.  
f. The locked CD containing the Full HSBI Version Appendix shall bear the label marked 
'FULL VERSION OF HSBI APPENDIX TO SUBMISSION'  and indicate the name of the 
Party that submitted the HSBI. In addition, the HSBI Appendix itself shall be marked 
with heading with double bolded square brackets on each page in an electronic file 
that contains the notation 'FULL VERSION OF HSBI APPENDIX TO SUBMISSION'. The 
electronic file containing the HSBI Appendix shall have a file name that contains the 
letters "HSBI VERSION".  
g. The Party shall submit one copy of the Full HSBI Version Appendix to the Panel 
(through Mr. XX) and two copies to the other  Party in the form of two locked CDs. The 
Full HSBI Version Appendix shall not be transmitted via e -mail. Parties shall agree 
between themselves beforehand on the name of the Approved Person that is to 
receive the locked CD.  WT/DS353/RW/ Add.1  
 
- A-15 - 
 
  h. The Party shall commence tr ansfer of the locked CDs containing the Full HSBI Version 
Appendix no later than the deadline for the submission concerned, and, at the same 
time, provide the Panel and the other Party with proof that this has been done.  
 i. No more than one working day in  advance of a Panel meeting with the parties, a Party 
may, exclusively at that Party's Permanent Mission in Geneva, use the locked CD to 
produce no more than one hard copy of the Full HSBI Version Appendix for each HSBI 
Approved Person planning to attend t hat Panel meeting. All paper versions produced 
pursuant to this subparagraph shall be collected by the Party concerned and destroyed 
immediately after the conclusion of the meeting.  
j. WTO Approved Persons d esignated pursuant to paragraph  31 as being addit ionally 
authorized to access HSBI may, exclusively on the WTO premises, produce paper 
versions of the Full HSBI Version Appendix for the purpose of, and immediately prior 
to, a Panel meeting with the parties and/or an internal meeting. When not in use, 
these paper versions shall be stored in a locked container in the designated secure 
location referred to in paragraph  48. All paper versions produced pursuant to this 
subparagraph shall be destroyed after the Conclusion of the Panel Process as defined 
in para graph  3. 
k. Parties are encouraged to submit versions of exhibits containing HSBI from which all 
HSBI has been deleted. Such exhibits shall be referred to as "HSBI -Redacted Version 
Exhibits". HSBI -Redacted Version Exhibits may contain BCI.  
i. A Party may submit HSBI -Redacted Version Exhibits prepared by that Party to 
the Panel, and serve them on the other Party in accordance with the applicable 
procedures, at the time it serves the submission to which the exhibit relates.  
ii. If a HSBI -Redacted Version Exh ibit is not submitted by the Party submitting the 
exhibit, an HSBI -Approved Person representing the other Party may prepare an 
HSBI-Redacted Version Exhibit of any such exhibit.  
iii. HSBI-Redacted Version Exhibits may be prepared by an HSBI -Approved person , 
at an HSBI location, by deleting the HSBI in the exhibit (identified by double 
brackets) from such exhibit and either printing or photo -copying the resulting 
document containing no HSBI. The deletion of HSBI from the resulting 
document shall be verified by a person authorized for this purpose by the Party 
that submitted the exhibit(s) in question. The resulting document containing no 
HSBI (but which may contain BCI) will constitute the HSBI -Redacted Version 
Exhibit of such exhibit, and may be removed from  the HSBI location.   
iv. The Parties shall cooperate to the maximum extent possible to make available 
necessary facilities, including printers, photo -copiers, and physical means for 
the deletion of text from a document, to enable the preparation of 
HSBI-Redacted Version Exhibits, including making available an HSBI -Approved 
Person for purposes of the verifica tion provided for in paragraph iii.  above. 
HSBI-Redacted Version Exhibits may be prepared by HSBI -Approved Persons 
upon request during the times the de signated room at the relevant HSBI 
location is available, as provided for in paragraph 51 of these Procedures.   
v. The Panel shall resolve any disagreement arising from the operation of this sub -
paragraph, and may take appropriate action to ensure that th e provisions of this 
paragraph are satisfied.  
l. The Panel reserves the right, after consulting the parties, to amend the provisions of 
this paragraph at any time in order to accommodate situations arising during Panel 
meetings, and the preparation of the interim report and the final report.  
58. The Panel shall not disclose HSBI in its report, but may make statements or draw 
conclusions that are based on the information drawn from the HSBI.  WT/DS353/RW/ Add.1  
 
- A-16 - 
 
  VII.  RESPONSIBILITY FOR C OMPLIANCE  
59. Each Party and Third Part y is responsible for ensuring that its Approved Persons and 
Third Party BCI Approved Persons comply with these procedures to protect BCI and HSBI 
submitted by each Party and Third Party, as well as with enforceable codes of professional conduct 
to which it s Approved Persons or other Outside Advisors are subject. WTO Approved Persons shall 
comply with these procedures to protect BCI and HSBI submitted by a Party or Third  Party. WTO 
Approved Persons are covered by the WTO Rules of Conduct. As provided for in the WTO Rules of 
Conduct, evidence of breach of these Rules may be submitted to the Chair of the DSB or to the 
Director -General of the WTO, or his designee, as appropriate, for appropriate action pursuant to 
Section VIII of the WTO Rules of Conduct.  
VIII.   ADDITIONAL PROCEDURE S 
60. After consulting with the Parties, the Panel may apply any other additional procedures that it 
considers necessary to provide additional protections to the confidentiality of BCI or HSBI or other 
types of information not explici tly covered by these Procedures but which the Panel considers may 
be of assistance in adjudicating the claims before it, including, if necessary, information that the 
United States internally classifies as "Top Secret", "Secret", "Confidential", or control led pursuant 
to the United States ' International Traffic in Arms Regulation ( "ITAR"). 
61. The Panel may, with the consent of both Parties, waive any part of these procedures. Such 
"waiver" shall be specifically set forth in writing and signed by a represen tative of both Parties.  
IX.  RETURN AND DESTRUCTI ON 
62. Except as provided for in paragraph  63, after the Conclusion of the Panel Process as defined 
in paragraphs  3 a., 3 c. or 3 d, or as contemplated in paragraph  64, within a period to be fixed by 
the Pan el, WTO Approved Persons, the Parties and Third Parties (along with all Approved Persons) 
shall destroy or return all documents (including electronic material) or other recordings containing 
BCI to the Party or Third Party that submitted such documents or other recordings. At the same 
time, WTO Approved Persons and the Parties shall destroy and/or return any electronic material 
submitted by a Party or Third Party that contains HSBI.  
63. The WTO Secretariat shall retain one hard copy and one electronic vers ion of any final report 
of the Panel containing BCI, and one electronic version of all documents containing BCI submitted 
to the Panel, recorded on locked CD(s), to be kept in sealed containers in a locked cabinet on the 
premises of the WTO Secretariat.  
64. After the Conclusion of the Panel Process as defined in paragraph  3 b., the Secretariat will 
inform the Appellate Body of these procedures and will transmit to the Appellate Body any 
BCI/HSBI governed by these Procedures. Such transmission shall occur s eparately from the rest of 
the Panel record, to the extent possible. Following the adoption by the DSB of the Appellate Body 
report pursuant to Article 17.14 of the DSU, or a decision by the DSB by consensus not to adopt 
the Appellate Body Report pursuant to Article 17.14 of the DS U, the provisions of paragraphs  62 
and 63 shall apply.  
65. The hard drive of each Stand -alone computer and all media used to back up such computers 
shall be destroyed at the Conclusion of the Panel Process.  
 
 
 WT/DS353/RW/ Add.1  
 
- A-17 - 
 
  ANNEX A -3 
PROCEDUR ES FOR THE PARTIAL O PENING TO THE PUBLIC   
OF THE MEETING OF TH E PANEL  
(2 October 2013 ) 
1. The Panel's meeting with the parties will start at 10:00 a .m. on 29 October 2013. The Panel 
will invite the European Union to first present its full opening oral stat ement before the floor is 
given to the United States to present its full opening oral statement. The oral statements will be 
videotaped for later viewing, as set out in paragraph 6 below. If at any point during its oral 
statement a party intends to utter B CI or HSBI, it shall request that the videotaping be 
discontinued for the relevant portion of the oral statement, after which videotaping will be 
resumed. A party may first deliver the part of its oral statement that contains no BCI or HSBI, and 
then ask f or the videotaping to be discontinued, before delivering a second part of its oral 
statement containing BCI or HSBI.  
2. BCI or HSBI in the texts of the oral statements provided to the panel and the other party 
during the meeting and prior to the delivery of the oral statements shall be bracketed in 
accordance with the BCI/HSBI Procedures. BCI should be contained within single brackets. HSBI 
should be contained within double brackets and deleted. In addition, a party including HSBI in its 
oral statement sha ll provide, prior to delivery of the oral statement, one paper copy to the panel 
and one paper copy to the other party, on coloured paper, with the HSBI included in double 
brackets. This document shall be subject to the same confidentiality rules as an HSB I Appendix to 
a written submission.  
3. During the meeting with the parties, the following persons will be admitted into the meeting 
room: (1) the Panel; (2) all BCI/HSBI -approved members of the delegations of the parties ; 
(3) BCI/HSBI -approved WTO Secreta riat staff assisting the Panel; and (4) the team hired by the 
WTO Secretariat to videotape the proceedings. If at any point during its oral statement a party 
intends to utter HSBI, those individuals not having HSBI approval shall be asked to exit the room.  
If at any point a party intends to utter either BCI or HSBI, the team hired by the WTO Secretariat 
to videotape the proceedings shall be asked to exit the room.   
4. After each oral statement has been delivered, the Panel will ask the parties whether they  
can confirm that no BCI or HSBI was pronounced during the videotaped portion of the oral 
statement. If both parties so confirm, the showing of the videotape will proceed according to 
schedule. If either party requests to review the videotape, both parties  will be invited to attend 
that review, accompanied by a representative of the Secretariat and the technician responsible for 
editing, on the premises of the WTO at an appropriate time after the meeting. Therefore, parties 
should be prepared to advise the technician which portion of the oral presentation presents a 
concern, and limit review to those portions of the videotape to the maximum extent possible. If 
either party considers that a specific portion of the videotape must be deleted – because it is BCI  
or HSBI – the specific portion of the videotape will be deleted.  
5. The third party session will start at 14:00 on 30 October 2013. Third parties shall 
indicate to the Panel, not later than close of business on 18 October 2013, whether they 
consent to th e videotaping of their oral statements for later viewing . The Panel will start 
the third party session with the statements of those third parties so consenting. The Panel shall 
then proceed to a third party closed session during which the rest of the third  parties shall make 
their statements, and the Panel or any party or third party may pose questions to any third party 
or make comments concerning these statements. Should any third party intend to include BCI 
in its oral statement or otherwise to refer to BCI during the third party session, it is 
requested to inform the Panel by close of business on 24 October 2013 so that appropriate 
arrangements can be made to protect the confidentiality of that information.  
6. The showing of the videotape of the oral sta tements of the parties and third parties shall 
take place on 31 October 2013. The showing will be open to officials of WTO Members and 
Observers, to accredited journalists, and to accredited representatives of non -governmental WT/DS353/RW/ Add.1  
 
- A-18 - 
 
  organizations, upon presentat ion of their official badges. The Secretariat will place a notice on the 
WTO website in due course informing the public of the showing. The notice shall include a link 
through which members of the public can register directly with the WTO.  
 
______________ _ 
 
 
 WT/DS353/RW/ Add.1  
 
- B-1 - 
 
  ANNEX B  
ARGUMENTS OF THE EUR OPEAN UNION  
Contents  Page  
Annex B -1 Executive Summary of the first written submission of the European Union  B-2 
Annex B -2 Executive Summary of the second written submission of the European Union  B-11 
Annex B -3 Executive  Summary of the opening statement  of the European  Union  at the 
Panel meeting  B-19 
Annex B -4 Executive Su mmary of the closing statement of the European  Union  at the 
Panel meeting  B-24 WT/DS353/RW/ Add.1  
 
- B-2 - 
 
  ANNEX B -1 
EXECUTIVE SUMMARY OF  THE FIRST WRITTEN SUBMIS SION  
OF THE EU ROPEAN UNION  
Contains no BCI or HSBI  
I. INTRODUCTION  
1. In disregard of the rulings and recommendations of the Dispute Settlement Body ( "DSB") – 
adopted after more than five years of panel proceedings in US – Large Civil Aircraft and eleven 
months of appel late review – the United States ( "US") federal, state, and local authorities have not 
only failed to withdraw the subsidies or remove the adverse effects, but they have actually 
significantly increased  those subsidies and aggravated  the adverse effects cau sed by those 
subsidies.  
2. In this submission, the European Union ( "EU") details why the US measures taken to comply 
are wholly insufficient to satisfy the requirements of Article 7.8 of the Agreement on Subsidies and 
Countervailing Measures  ("SCM Agreemen t"). To the contrary, US federal, state, and local 
authorities have generally been increasing the value of the subsidies challenged before the original 
panel, and they have also adopted new closely related measures that constitute undeclared 
measures taken  to comply, within the meaning of Article 21.5 of the Understanding on Rules and 
Procedures Governing the Settlement of Disputes  ("DSU").  
3. For the majority of subsidies before the original panel, the United States has admitted that it 
had taken no affir mative action to withdraw the subsidies, which continue to increase and continue 
to cause adverse effects. In the few instances in which the United States has taken affirmative 
action, the actions are, at best, wholly insufficient, and, at worst – in the c ase of the National 
Aeronautics and Space Administration ( "NASA ") and US Department of Defense ( "DOD") 
aeronautics research & development ( "R&D") subsidies – a sham transaction that does absolutely 
nothing to change the continuing subsidies or remove their  adverse effects.  
4. The subsidies granted or maintained by the United States are contingent in law or in fact 
upon actual or anticipated export, and thus prohibited by Articles 3.1(a) and 3.2, and footnote 4, 
of the SCM Agreement . They are also contingen t in fact upon the use of domestic over imported 
goods, and thus prohibited by Articles 3.1(b) and 3.2 of the SCM Agreement . Further, they are 
inconsistent, in law or in fact, with Article III of the General Agreement on Tariffs and Trade 1994 
("GATT 1994 "). 
5. As for the adverse effects resulting from the subsidies before the original panel, those 
effects persist after the end of the implementation period. The non -withdrawn subsidies before the 
original panel, and the additional subsidies granted to Boeing  more recently, are presently causing 
adverse effects to the interests of the European Union, with no end in sight. The United States has 
failed to remove the adverse effects that the original panel and the Appellate Body found to be 
caused through sales o f the Boeing 787 and that aircraft 's effect on Airbus ' prices and market 
shares. In particular, the panel and Appellate Body 's findings on the R&D subsidies and their 
adverse effects were confirmed by the President of the United States, himself, in a Febru ary 2012 
speech at Boeing 's Washington State headquarters, where he explained that the Boeing 787 "was 
first designed virtually using the same technology that was developed by NASA ", "Government 
research helped to create this plane ", and that the U.S. Gove rnment has "got to support this kind 
of cutting -edge research ... so that jobs and industries take root " in the United States, not 
abroad.1 The effects found by the panel and Appellate Body continue unabated, and are increased 
through additional significan t sales that Airbus lost to Boeing 's competing 787, 737 MAX and 
737NG aircraft, and significant suppressed prices and displaced and impeded market shares of 
Airbus ' A350XWB, A330, A320neo and A320ceo large civil aircraft ( "LCA"), or a threat thereof.  
                                               
1 http://www.whitehouse.gov/photos -and-video/video/2012/02/17/president -obama -speaks -promoting -
american -manufacturing -and-export#transcript . WT/DS353/RW/ Add.1  
 
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  6. Accordingly, the United States has failed to achieve compliance with the recommendations 
and rulings of the DSB. Instead, after the end of the implementation period, the United States has 
continued to grant and maintain subsidies, and to use those subsidies  to cause present adverse 
effects to EU LCA -related interests, in defiance of the DSB 's recommendations and rulings.  
II. SUMMARY OF PROCEEDINGS TO DATE 
7. The European Union recalls the DSB 's adoption, on 23 March 2012, of the reports of the 
Appellate Body  and the original panel (as modified) in US – Large Civil Aircraft , which found that 
US federal, state and local governments provided the following specific subsidies to US producers 
of large civil aircraft – specifically, Boeing – that cause adverse effec ts to European Union interests 
and are inconsistent with US obligations under the SCM Agreement : 
 Payments and other support under NASA and DOD aeronautics R&D programmes;  
 Tax exemptions under Foreign Sales Corporation/Extraterritorial Income ( "FSC/ETI ") 
legislation and successor acts;  
 Washington State business & occupation ( "B&O") tax rate reduc tions; and,  
 Tax exemptions related to Industrial Revenue Bonds ( "IRBs") issued by the City of 
Wichita, Kansas.  
 
The DSB also ruled that the United States provides prohibited subsidies to Boeing.  
8. On 23 September 2012, – the day before the end of the i mplementation period – the 
United  States notified the European Union that it purported to have achieved compliance by, inter 
alia: 
 Modifying the parties ' rights under certain NASA contracts and DOD cooperative 
agreements, technology investment agreements , and Other Transactions so as to 
make them "consistent with commercial practice "; 
 Terminating or ceasing to fund certain NASA and DOD programmes;   
 Enacting legislation terminating the FSC/ETI tax benefits and confirming that Boeing 
did not use FSC or  ETI tax benefits after 2006;  
 Applying Washington State B&O tax rates for aerospace manufacturing and retailing 
consistent with Article 5(c) of the SCM Agreement ; and  
 Applying the City of Wichita IRB programme consistent with Article 5(c) of the SCM 
Agreement . 
 
9. However, as the European Union demonstrates in this submission, the actions and events 
listed by the United States in its 23 September 2012 notification do not withdraw the subsidies or 
remove their adverse effects, as required by Articles 4.7  and 7.8 of the SCM Agreement , such that 
the United States has failed to achieve compliance with the recommendations and rulings of the 
DSB. Accordingly, following consultations with the United States, the European Union requested 
that a panel be establish ed to review US non -compliance.  
10. This compliance Panel was established by the DSB on 23 October 2012. At the DSB meeting, 
the European Union requested initiation of Annex V procedures for developing information 
concerning serious prejudice. The United States objected, and continued to object to each 
subsequent EU effort to move forward with these information gathering procedures. The 
European  Union therefore requested that the Panel make a series of rulings re garding the initiation 
of Annex  V, to which the United States again objected. On 26 November 2012, the compliance 
Panel, rejecting US arguments to the contrary, found that that "Annex V procedures are available 
in compliance proceedings " involving serious prejudice claims and that, in this dispute, "the 
conditions for initiating an Annex V procedure were met ". Given the passage of time, however, 
rather than proceed with the Annex V procedure that had been found to be automatically initiated, 
the Panel decided to gather information through its powers under Article 13 of the DSU.  
11. The compliance Panel issued a series of questions to the United States regarding the 
measures and claims at issue, with responses to certain questions due by 25 January 2013 and to 
the remainder by 28 February 2013. At each  deadline, however, the United States provided only 
partial responses. Further, on both occasions, the United States informed the Panel and the 
European Union that it would provide additional documents and other responsive information at a 
later date. The latest self -granted US extension lasted until four business days prior to the WT/DS353/RW/ Add.1  
 
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  deadline for the EU First Written Submission, thus making it impossible for the European Union to 
utilise in this submission the information belatedly provided. As a direct resul t of the United States ' 
decision to respond to the Panel 's Article 13 questions in the manner described above, the 
compliance Panel should take the evidence submitted by the European Union with this submission 
as best information available, sufficient, wit h reasonable inferences if and where necessary, to 
support prima facie  claims.  
III. LEGAL FRAMEWORK GOVERNING THESE COMPLIANCE PROCEEDINGS  
12. In this section, the European Union sets out its view of the applicable legal framework. It 
explains the existenc e of two compliance mechanisms with respect to actionable subsidies – 
withdrawal of the subsidy or removal of the adverse effects – and the complaining Member 's 
burden to demonstrate present adverse effects.  
IV. SCOPE OF THESE COMPLIANCE PROCEEDINGS  
13. The European Union recalls the US Preliminary Ruling Requests of 13 November 2012, 
wherein the United States asserted that several measures and claims in the EU Panel Request 
were outside the scope of the compliance proceedings. In its response, the Europea n Union 
explained that the US requests were unfounded, premature and based on a limited understanding 
of the EU claims. The Panel deferred a decision on these issues until after the Parties ' first written 
submissions.  
14. The European Union believes that after reviewing the detailed descriptions of the subsidies 
and the associated legal claims in this submission, the United States will choose to abandon many, 
if not all, of its jurisdictional challenges. The European Union will allow the United States the 
opportunity to do so, before re -engaging on US arguments concerning the proper scope of these 
proceedings.  
V. THE UNITED STATES HAS FAILED TO WITHDRAW THE SUBSIDIES TO THE US LCA  INDUSTRY , AND 
HAS INTRODUCED ADDITIONAL SUBSIDIES WITHIN THE SCOPE OF THESE PROCEEDINGS  
15. In this Section, the European Union details the US failure to withdraw the subsidies in a 
manner consistent with the DSB 's rulings and recommendations, as well as the provision by US 
federal, state, and local authorities of additional subsid ies within the scope of the Panel 's 
jurisdiction. The subsidies at issue, and the EU estimates of their minimum values (to the extent 
possible), are summarised in the table below:  
Overview of Post -2006 Subsidies to Boeing 's LCA Division  
(Millions of Dolla rs) 
Category of 
Subsidy  Name of Subsidy  Description of Subsidy  Total 
Amount  
NASA 
Aeronautics 
R&D Fundamental Aeronautics  NASA programme with subsonic and 
supersonic fixed -wing R&D projects  $784.78  
Integrated Systems Research  NASA programme with 
Environm entally Responsible Aviation 
project  $172.66  
Aviation Safety  NASA programme with air vehicle -
level, system -level, and 
environmental safety R&D projects  $379.16  
Aeronautics Strategy & 
Management  NASA programme containing 
aeronautics R&D cross -programme 
support and Innovative Concepts for 
Aviation project  $9.97  WT/DS353/RW/ Add.1  
 
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  Category of 
Subsidy  Name of Subsidy  Description of Subsidy  Total 
Amount  
Aeronautics Test Program  NASA programme funding aeronautics 
ground and flight test infrastructure  $408.49  
Strategic Capabilities  
Assets Program  NASA programme managing test, 
flight simulation, and computing 
infrastructure  $56.18  
High-End Computing Program  NASA programme funding 
supercomputing resources used for 
aeronautics R&D  $7.04  
Federal 
Aviation 
Administration 
R&D Continuous Lower Energy, 
Emissions, and Noise  
("CLEEN") Program  FAA program me funding research into 
near-term LCA energy -, emissions -, 
and noise -reducing technologies, as 
well as with demonstrator flights  $27.99  
Department of 
Defense 
Aeronautics 
R&D Research, Development, Test 
& Evaluation ("RDT&E") 
Program  DOD programme funding  R&D into 
dual-use aircraft technologies  $2,895.2  
FSC/ETI  FSC/ETI Legislation  
and Successor Acts  Federal income tax 
exemptions/exclusions on certain LCA 
produced and sold for use outside the 
United States  $51.22  
State of 
Kansas  Wichita IRBs  Property and sales tax breaks for LCA 
component production facilities 
associated with industrial revenue 
bonds issued by the City of Wichita  $59.15  
State of 
Washington  State B&O Tax Rate Reduction  Washington State business & 
occupation ("B&O") tax rate reduction 
for production and sales of LCA  $3,141.5  
State B&O Tax Credit for  
Preproduction/Aerospace  
Product Development  Tax credit for LCA -related R&D  $260.49  
State B&O Tax Credit for  
Property Taxes  Tax credit for property taxes on LCA 
production facilities  $18.2  
State B&O Tax Credit for  
Leasehold Excise Taxes  Tax credit for leasehold excise taxes 
on LCA production facilities  $11.12  
Sales and Use Tax Exemptions  Exemption from sales and use taxes 
on computer hardware, software, and 
peripherals used in developing LC A $138.78  
City of Everett B&O Tax Rate 
Reduction  City of Everett B&O tax rate reduction 
for Boeing LCA  $301.36  
Joint Center for Aerospace 
Technology Innovation  State office advancing public 
university research for Boeing LCA  $0.57  
State of South 
Carol ina Project 
Gemini -
Related 
Subsidies  Project Site Lease  Lease to the site of Boeing's  
South Carolina 787 production 
facilities at $1 per year  $150.03  
Project Gemini 
Facilities & 
Infrastructure  Provision of facilities and 
infrastructure for Boeing's 787 final 
assembly  
facility at no cost  $400.64  
Sales and Use Tax 
Exemptions  Exemptions for Boeing from sales and 
use taxes on aircraft fuel, 
construction materials, and computer 
equipment  $49.14  WT/DS353/RW/ Add.1  
 
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  Category of 
Subsidy  Name of Subsidy  Description of Subsidy  Total 
Amount  
Income Tax 
Allocation and 
Apportionment 
Agreement  Method of  calculating Boeing's state 
income taxes that excludes revenue 
from the sales of LCA for export  $275 
Project Gemini 
MCIP Jobs Tax 
Credits  Tax credits for hiring due to location 
in a multi -county industrial park  $19 
Large Cargo 
Freighter Property 
Tax Exemption  Property tax exemption for Boeing's 
"Dreamlifter" Large Cargo Freighters  $102.58  
Workforce 
Programme  State -run workforce hiring, training, 
and development programme for 
Boeing's 787 final assembly facility  $29.16  
Boeing Fee 
Agreement  Reduct ion of property taxes on 
Boeing's 787 final assembly facility 
under a Fee -in-Lieu-of-Taxes 
("FILOT") Agreement  $432.77  
Project 
Emerald -
Related 
Subsidies  Project Emerald 
Facilities & 
Infrastructure  Provision of facilities and 
infrastructure for Boeing's f uselage 
fabrication and integration complex at 
no cost  $138.32  
Project Emerald 
MCIP Jobs Tax 
Credits  Tax credits for hiring due to location 
in a multi -county industrial park  $7.7 
Project Emerald 
Fee Agreement  Reduction of property taxes on 
Boeing's 7 87 fuselage fabrication and 
integration complex under a FILOT 
Agreement  $62.34  
Total  All  $10,390.54  
 
16. The European Union shows that each of the measures listed in the figure above is a subsidy 
under Article 1.1 of the SCM Agreement  – i.e., a "financi al contribution " that confers a "benefit " on 
its recipients. The European Union also shows that each subsidy is specific under Article 2 of the 
SCM Agreement . 
17. First, the European Union addresses the failure of the United States to withdraw the 
aeronaut ics R&D subsidies from NASA and DOD, as well the additional subsidies within the scope 
of this dispute provided by NASA, the Federal Aviation Administration ( "FAA"), and DOD.  
18. NASA has provided, and continues to provide, Boeing with valuable funding an d support for 
aeronautics R&D through NASA programmes challenged before the original panel, as well as 
successor and other closely related programmes. Together, these programmes have provided 
Boeing with over $1.8 billion in R&D funding for LCA -related tec hnologies between 2007 and 2012. 
These technologies – including, for example, composite materials, aerodynamic improvements, 
and advanced configurations – aim to achieve, inter alia , continued improvements in fuel 
efficiency, noise, and performance of US L CA for the next twenty -five years and beyond.  
19. Closely connected to the NASA aeronautics R&D subsidies, the FAA launched in 2010 the 
Continuous Lower Energy, Emissions, and Noise ( "CLEEN ") Program to fund research, including by 
Boeing, into near -term e nergy -, emissions -, and noise -reduction technologies for LCA. The FAA 
CLEEN programme also funds Boeing 's "ecoDemonstrator " programme to flight test an array of 
new technologies, certain of which are already appearing on new Boeing LCA models.  
20. DOD has  also provided, and continues to provide, Boeing with funding and other support for 
LCA-related aeronautics R&D through the RDT&E Program Elements ( "PEs") challenged before the 
original panel, as well as through additional general aircraft and military air craft RDT&E PEs, such 
as those associated with the Boeing 767 -derived KC -46 tanker and the Boeing 737 -derived P -8A 
multi-mission maritime aircraft. Through the RDT&E Program, Boeing develops new technologies 
and gains other knowledge that it applies in the  design, development, production, and operation of 
both current and new models of LCA.  WT/DS353/RW/ Add.1  
 
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  21. For all three groups of the aeronautics R&D subsidies, NASA, FAA, and DOD, the European 
Union demonstrates that the subsidies continue well after the initial provisi on of funding, as the US 
Government continues to provide Boeing with valuable, ongoing rights to the intellectual property 
developed under the aeronautics R&D subsidy programmes – in particular, patents, data rights, 
and trade secret protection – for terms  of twenty years or longer.  
22. Moreover, as the Appellate Body found, the aeronautics R&D subsidies provide a "benefit " 
within the meaning of Article 1.1(b) of the SCM Agreement , as the US Government has provided, 
and continues to provide, Boeing with ri ghts to this intellectual property on more favourable terms 
than would be available in the commercial market. In this regard, the NASA and DOD 
"supplemental subject invention and patent license agreements " referenced in the 
23 September  2012 US Notificatio n do nothing to withdraw the subsidies. Under these 
agreements, Boeing grants the US Government non -transferrable licenses to "use, make, offer for 
sale, sell and import " certain patented technologies "for commercial purposes ", without the aid of 
any non -government entity. As the European Union explains, the US Government does not and 
cannot  make use of these license rights for commercial purposes, such as by producing aircraft or 
aircraft components itself. 
23. Second , the European Union shows that the Uni ted States has not taken any steps to 
withdraw the FSC/ETI and City of Wichita IRB subsidies found to exist in the original proceedings, 
and that Boeing continues to benefit from the associated tax breaks. In particular, as to FSC/ETI, 
Boeing can still rec eive tax benefits today and in the future for income recognised from sales or 
leases related to certain binding contracts. As to Wichita IRBs, while the most recent IRBs issued 
for Boeing were in 2007, the property tax exemptions for IRB -funded property ex tend for a period 
of ten years and, therefore, Boeing continues to benefit until at least the year 2017.  
24. Third, the European Union details the US failure to withdraw the subsidies provided by 
Washington State and its municipalities, as well as the addi tional Washington State subsidies 
provided for Boeing LCA. The Washington State and City of Everett B&O tax rate reductions; the 
B&O tax credit for preproduction/aerospace product development; the B&O tax credit for property 
taxes; and sales and use tax ex emptions for computer hardware, software, and peripherals used in 
developing LCA – all found to be specific subsidies by the original panel and Appellate Body – 
continue to be maintained in substantially the same form as during the original proceedings.  
25. Furthermore, Washington State provides Boeing with additional specific subsidies within the 
scope of the Panel 's jurisdiction in the form of a B&O tax credit for leasehold excise taxes and the 
establishment of the Joint Center for Aerospace Technology I nnovation, through which Washington 
provides Boeing with research funding and facilitates other support from the state 's public 
university system.  
26. Finally , the European Union addresses the massive new subsidies from the State of South 
Carolina and its political subdivisions for Boeing 's 787 final assembly facility (known as "Project 
Gemini ") and fuselage fabrication and integration complex (known as "Project Emerald ") located in 
North Charleston, South Carolina. These subsidies are closely related to, inter alia , the Washington 
State subsidies, as they are part of the incentive package for Boeing that South Carolina used to 
win the competition with Washington over the location of the 787 final assembly line – Boeing 's 
first LCA final assembly line outsid e of Washington State in the company 's history. The European 
Union estimates the value of these subsidies to be at least $1.67 billion, beginning in 2009.  
27. The South Carolina subsidies include: (i) providing Boeing with a long -term lease of 
government land for the Project Gemini and Project Emerald facilities at the below -market price of 
$1 per year; (ii) providing Boeing with custom -built facilities and infrastructure for Project Gemini 
and Project Emerald funded by State general obligation bonds; (iii ) providing Boeing with 
exemptions from state sales and use taxes for aircraft fuel, computer equipment, and construction 
materials; (iv) reducing Boeing 's corporate income taxes by approving a special income allocation 
and apportionment agreement, which a llows Boeing to exclude income from sales destined for 
export from the calculation of its taxable income; (v) providing Boeing with tax credits for new 
jobs as a result of designating Project Gemini and Project Emerald as part of a multi -county 
industrial park; (vi) exempting Boeing from property taxes on its modified 747 -400 "Dreamlifter " 
Large Cargo Freighters; (vii) providing Boeing -specific workforce training, recruitment, and 
development programmes for Project Gemini; and (viii) reducing Boeing 's prope rty tax liability for WT/DS353/RW/ Add.1  
 
- B-8 - 
 
  both Project Gemini and Project Emerald through negotiated fee -in-lieu-of-taxes agreements with 
Charleston County.  
28. In sum, as a result of the US failure to withdraw the subsidies pursuant to Article 7.8 of the 
SCM Agreement , as we ll as the maintenance of additional subsidies within the scope of the Panel 's 
jurisdiction, the United States is providing Boeing with specific subsidies worth more than $10.39 
billion during the post -2006 time period.  
VI. PROHIBITED SUBSIDIES AND MEASURE S INCONSISTENT WITH ARTICLE III OF THE GATT  1994   
29. First, the European Union recalls its demonstration that the FSC/ETI legislation and 
successor act subsidies continue, and that these precise measures have already been found to 
provide prohibited de ju re export -contingent subsidies to Boeing. Second , the European Union 
demonstrates that South Carolina 's special income tax apportionment method for Boeing is also a 
prohibited de jure export -contingent subsidies, as it excludes certain Boeing sales from gi ving rise 
to taxable income on the condition  that they are destined for ex port markets outside the 
United  States . 
30. Third, the European Union demonstrates that the subsidies described in Section V are 
contingent in fact on actual and anticipated exportat ion, and therefore violate Articles 3.1(a) and 
3.2 of the SCM Agreement . It does so by showing that the ratio of both actual and anticipated 
Boeing sales are skewed towards exports in a manner not reflective of the conditions of supply and 
demand that woul d exist in the absence of the subsidies. Further, the European Union explains 
that the subsidies are geared to induce or incentivise this skewing; the United States conditions 
Boeing's behaviour by encouraging and directing Boeing to favour exports, and by  rewarding 
Boeing when it complies. At the same time, Boeing has telegraphed a clear signal back to the 
United States: keep granting or maintaining subsidies and we will keep exporting. The United 
States has thus come to associate subsidies with exports, a nd Boeing has come to associate 
exports with subsidies.  
31. Fourth , the European Union demonstrates that the subsidies are also contingent in fact upon 
the use of domestic over imported goods, and therefore violate Articles 3.1(b) and 3.2 of the SCM 
Agreem ent. It does so by showing that the subsidies involve conditions that necessarily imply use 
of US goods. The European Union further shows that the United States favours the use of US 
domestic goods and labour, and conditions Boeing's behaviour by encouragi ng and directing 
Boeing to favour US domestic goods and labour, and by rewarding Boeing when it complies.  
32. Fifth, and similarly, these same measures are applied so as to afford protection to domestic 
production of parts and materials capable of use in the production of Boeing LCA, in violation of 
Article III:4 of the GATT 1994  because, for the same reasons that the measures are contingent on 
the use of domestic over imported goods, they afford less favourable treatment to imported like 
products.  
VII. ADVERSE EFFECTS  
33. Just as the United States has failed to withdraw the subsidies, it has also failed to remove 
the adverse effects of those subsidies. Specifically, the United States grants and maintains 
subsidies to Boeing after the end of the implement ation period that cause present adverse effects 
to EU LCA -related interests, collectively amounting to more than $100 billion in lost revenue to 
Airbus.  
34. In this section, the European Union demonstrates the fallacy of the US assertion, offered 
without any evidence in its 23 September 2012 notification, that  
{i}n light of the conditions of competition in the market for large civil aircraft and 
actions taken by the United States, any adverse effects of the subsidies in question 
have ceased to exist, or a  "genuine and substantial relationship of cause and effect " 
no longer exists between the subsidies subject to the recommendations and rulings of 
the DSB and any adverse effects.  WT/DS353/RW/ Add.1  
 
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  35. Indeed, none of the steps indicated by the United States relate to the rem oval of adverse 
effects. The United States does not identify any changes in the conditions of competition in the 
LCA markets to support its assertions that there no longer exists a genuine and substantial causal 
link between the US subsidies and adverse ef fects, nor does the United States provide any support 
for its assertion that the "adverse effects ... have ceased to exist ".  
36. In fact, the significant lost sales and threat of displacement found in the original proceedings 
continue to exist at present because the aircraft at issue remain undelivered. Similarly, the 
significant price suppression found in the original proceedings continue to affect present and future 
deliveries of Airbus LCA. Moreover, the subs idies to Boeing that the United  States grants  or 
maintains cause additional present significant lost sales, present significant price suppression, and 
present displacement or impedance, as well as a threat thereof. In this section, the European 
Union demonstrates that the significant lost sales, sign ificant price suppression, and the threat of 
displacement that the panel and the Appellate Body found in the original proceedings have not 
ceased to exist.  
37. After recalling the legal framework for assessing present adverse effects, the European 
Union ex plores several threshold issues, notably the key conditions of competition that facilitate 
the adverse effects presently caused by the US subsidies in the LCA markets. Amongst those 
conditions of competition are the supply -side Airbus/Boeing duopoly in the  LCA industry, the 
importance of technological innovation to the success of an LCA manufacturer, as well as the price 
sensitivity of many key sales campaigns between Airbus and Boeing, on the one hand, and airline 
or leasing company customers for LCA, on t he other. The European Union also assesses the 
different LCA product markets in which competition between Airbus and Boeing over product 
quality and prices takes place.  
38. In assessing the existence of a causal link, the compliance Panel is required to co nsider the 
effects of all of the subsidies at issue collectively. The European Union also explains that the 
compliance Panel should adopt an approach that aggregates the following groups of subsidies for 
purposes of assessing their adverse effects: (i) the  US aeronautics R&D subsidies, consisting of the 
NASA, FAA and DOD aeronautics R&D subsidies; (ii) the tied tax subsidies, consisting of the 
FSC/ETI tax exemptions, the Washington State and City of Everett B&O tax rate reductions, and 
the South Carolina in come allocation and apportionment agreement; and (iii) the remaining state 
and local subsidies that affect Boeing 's non -operating cash flow.  
39. As the European Union explains, there is a "genuine and substantial relationship of cause 
and effect " between t he subsidies at issue and the present market phenomena enumerated in 
Article 6.3 of the SCM Agreement , through two causal mechanisms.  
40. First, certain of the non -withdrawn US aeronautics R&D subsidies affect Boeing 's 
technological capabilities. In parti cular, these subsidies enable technologies that improve the 
quality and/or accelerate the availability at market of Boeing LCA, including for the 787, the new 
787-10 and the new 777X, and the recently -launched 737 MAX. The evidence demonstrates that 
the US  aeronautics R&D subsidies are a genuine and substantial cause of: (i) Boeing 's 
development of innovative technologies for these aircraft; and, (ii) the availability of innovative 
technologies that improve future Boeing LCA.  
41. Second , the evidence demon strates that the US subsidies also enable Boeing to charge 
lower prices for its LCA. Specifically, (i) certain other of the R&D subsidies, (ii) the tied tax 
subsidies, and (iii) the remaining state and local subsidies, enable Boeing – without sacrificing 
profit margins on its 787, 737 MAX and 737NG family LCA sales – to lower prices for those aircraft 
in sales campaigns in which they are competing with Airbus A350XWB, A320neo and A320ceo 
family LCA.  
42. The European Union then establishes the various forms  of present adverse effects caused by 
the non -withdrawn US subsidies.  
43. First, the European Union demonstrates the effects of the US subsidies benefiting Boeing 's 
787 and 777X family LCA on Airbus ' A330 and A350XWB family LCA. Through their effects on t he 
technology of the 787, including the new 787 -10, and of the upcoming 777X, as well as through 
their effects on Boeing 's prices for these LCA, the US subsidies are a genuine and substantial WT/DS353/RW/ Add.1  
 
- B-10 - 
 
  cause of: (i) present significant price suppression for Airbus ' A330; and, (ii) present significant 
price suppression, significant lost sales and impedance of Airbus ' A350XWB family LCA, as well as 
a threat thereof.  
44. Second , the European Union also establishes the effects of the US subsidies benefiting 
Boeing 's 737  MAX family on Airbus ' A320neo family LCA. Through their combined effects on the 
technology and prices of Boeing 's 737 MAX family LCA, the US subsidies are a genuine and 
substantial cause of present significant lost sales, significant price suppression and  impedance of 
Airbus ' A320neo family LCA, as well as a threat thereof.  
45. Third, the European Union demonstrates the effects of the US subsidies benefiting Boeing 's 
737NG family on Airbus ' A320ceo family LCA. Through their effects on Boeing 's prices, the  US 
subsidies are a genuine and substantial cause of present significant lost sales, significant price 
suppression, and displacement or impedance of Airbus ' A320ceo family LCA, as well as a threat 
thereof.  
VIII.  CONCLUSION AND REQUES T FOR RELIEF  
46. For the reasons set out in this submission, the European Union respectfully requests the 
compliance Panel to find that the United States has failed to implement the DSB 's 
recommendations that it withdraw the subsidies or take appropriate steps to remove the adv erse 
effects, pursuant to Article 7.8 of the SCM Agreement , and to make appropriate consequential 
recommendations.  
 WT/DS353/RW/ Add.1  
 
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  ANNEX B -2 
EXECUTIVE SUMMARY OF  THE SECOND  WRITTEN SUBMISSION  
OF THE EUROPEAN UNIO N 
Contains no BCI or HSBI  
I. INTRODUCTION  
1. As revealed in recent statements by the President of the United States, the United States 
and Boeing, the sole US large civil aircraft ( "LCA") manufacturer, understand that their current 
success in the LCA markets is the result of lavish support from the US federal go vernment as well 
as state and local governments. And they understand that this support must continue in order to 
maintain Boeing 's position of strength in the market, and to build upon the prior successes of such 
government support. And it is continuing, d espite the rulings and recommendations of the Dispute 
Settlement Body ( "DSB") in this dispute.  
2. Indeed, during the same three -month period that the US Government, aided by state and 
local governments, was preparing its defence in this dispute, a much la rger group of US, state, 
and local government employees was busy devising plans on how to increase  the subsidies and the 
effects thereof. For example, in the National Aeronautics and Space Administration 's ("NASA ") 
Fiscal Year ( "FY") 2014 budget request is sued on 10 April 2013, the US Government explained that 
"NASA 's innovative aeronautics research supports the U.S. aviation industry 's efforts to maintain 
competitiveness in a global market ". These are not the words of a government that intends to 
spend bil lions of dollars in order to develop technology that will benefit Boeing and Airbus equally, 
in stark contrast to the message of the US First Written Submission. Instead, these are the words 
of a government that is investing its resources to support Boeing 's efforts to compete with Airbus.  
3. Moreover, the subsidies at the state and local level are generally increasing  over time, not 
decreasing as they should be now, after the time has passed for the US Government to comply 
with the DSB 's rulings and recomm endations by withdrawing the subsidies or removing the 
adverse effects. In South Carolina, for example, state and local officials continue to expand and 
build upon the measures that they have previously passed, as they continue to compete with 
Washington S tate to bring Boeing 's production to their state.  
4. The United States ' disregard for the rulings and recommendations of the DSB is also evident 
from the centrepiece of its alleged implementation actions for the two largest sets of subsidies 
(i.e., NASA a nd US Department of Defense ( "DOD") Research & Development ( "R&D") programs) – 
license agreements between Boeing and the US Government, through which Boeing offers to share 
patent rights with the US Government that, by law, the US Government can not actual ly share in 
practice. The United States generally agrees with this assessment in its First Written Submission, 
but argues that Boeing has assumed the risk that US law and policy might change someday. Thus, 
in the event that the United States were to abando n the free market and transform the 
government into a business that develops, produces, markets, and sells its own LCA (without the 
assistance of any private companies, foreign or domestic), Boeing would be in a worse position 
than it would otherwise be in  the absence of those license agreements. Again, this is not the 
implementation measure of a Member that is taking its international obligations seriously.  
5. As for the US allegations that it has complied through removing the adverse effects, 
developments  over the last three months demonstrate that the exact opposite is true. In 
June 2013, Boeing launched its new 787 -10, facilitated by the US aeronautics R&D subsidies. With 
its subsidy -enabled advanced technologies and subsidy -enabled low prices, the 787 -10 has already 
secured orders for more than 100 aircraft from a number of leading airlines and leasing 
companies. The imminent launch of the 777X will further aggravate the degree of adverse effects 
caused by the US subsidies. Similarly, Boeing continues it s subsidy -fuelled aggressively pricing of 
the 737 MAX, itself benefitting from US R&D subsidies that increase the performance of the 
aircraft. The evidence before the Panel, therefore, demonstrates that the non -withdrawn US 
subsidies continue to cause the European Union and its LCA manufacturer to suffer significant lost 
sales, significantly suppressed prices and displaced or impeded sales volumes and market shares, WT/DS353/RW/ Add.1  
 
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  as well as a threat thereof. In short, the European Union has demonstrated that the United S tates 
has failed to remove the adverse effects.  
II. SCOPE OF THESE COMPLIANCE PROCEEDINGS  
6. In its First Written Submission, the United States substantially expands its requests that 
certain matters be ruled outside the scope of these proceedings and rei terates all of its prior 
(premature) requests. These latest US requests further demonstrate the erroneous legal 
framework relied on by the United States. This is not a question of jurisdiction or terms of 
reference, and there are no general WTO rules of res judicata  or non liquet : the Panel must make 
an objective assessment of all the matters before it. Article 21.5 proceedings include original 
measures found inconsistent, declared and undeclared measures taken to comply, as well as 
disagreements as to exis tence, whether with respect to acts or omissions, and a defending 
Member cannot assume such measures are consistent. The reasoning in EC – Bed Linen 
(Article  21.5 – EC) (which has not been followed in subsequent cases) does not apply when the 
law, the meas ures or the facts or evidence change; nor in cases of non -separability; nor where the 
Appellate Body has not completed the analysis, irrespective of whether requested to do so.  
7. All of the US requests relate to measures within the scope of these proceed ings, and to 
circumstances in which the law, the measures or the facts or evidence have changed, and/or to 
non-separable measures and/or circumstances in which the Appellate Body did not complete the 
analysis. The compliance Panel should therefore rule tha t they are all within the scope of these 
proceedings. Similar comments apply with respect to the US adverse effects scope requests, 
particularly because, whatever may or may not have occurred in original proceedings, this does 
not constrain the arguments  that a defending Member may raise in compliance proceedings.  
III. THE UNITED STATES HAS FAILED TO WITHDRAW THE SUBSIDIES FOUND TO CAUSE ADVERSE EFFECTS 
AND HAS GRANTED FURTHER SUBSIDIES  
8. In this Section, the European Union recalls its prima facie  case dem onstrating the US failure 
to withdraw the subsidies in a manner consistent with the DSB 's rulings and recommendations, as 
well as the introduction by US federal, state, and local authorities of additional subsidies within the 
scope of these proceedings. Fu rther, the European Union considers the US arguments to the 
contrary, and explains why the multitude of factual and legal errors in the US First Written 
Submission are fatal to the United States ' rebuttal. The European Union highlights the many 
instances i n which the United States attempts to rebut the European Union 's well documented and 
supported description of the facts with statements of alleged fact that have no support 
whatsoever. Moreover, the US First Written Submission repeatedly ignores the findin gs and 
relevant guidance of the Appellate Body in US – Large Civil Aircraft , and attempts to defend its 
measures based on erroneous interpretations of the Subsidies and Countervailing Measures  ("SCM 
Agreement "). 
9. The European Union begins with the subsid ies granted or maintained by the US federal 
authorities, namely NASA, the Federal Aviation Administration ( "FAA"), DOD, and the long -lived 
Foreign Sales Corporation/Extraterritorial Income ( "FSC/ETI ") tax scheme. The European Union 
then turns to the subsid ies granted or maintained by the US states and local authorities, focusing 
first on Wichita, Kansas, followed by Washington State, and concluding with the subsidies from 
South Carolina. Each of these measures is a specific subsidy within the meaning of Art icles 1 and 2 
of the SCM Agreement , and the United States has failed to present legal argument or factual 
evidence that would lead to any different conclusion.  
10. With respect to the R&D subsidies, the European Union begins with a discussion of the 
factual aspects, including recent developments and a detailed response to the United States ' 
distorted version of the facts. Next, the European Union turns to the legal analysis, explaining why 
the United States has failed in its attempt to demonstrate that the  these measures do not provide 
specific subsidies to Boeing.  
11. With respect to the NASA and FAA R&D subsidies , the European Union considers that the US 
First Written Submission confirms many of the EU 's major points. In particular, the United States 
confirms that the NASA R&D programmes are funding Boeing R&D into technologies that it can 
apply in the design, development, production, or modification of its current or future LCA. At the WT/DS353/RW/ Add.1  
 
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  same time, the United States repeatedly offers tangential, irrelevant , or misleading suggestions 
about NASA 's activities, albeit without providing actual evidence or arguments as to the facts 
asserted and why they matter. As for the DOD R&D subsidies , the US ' primary critique of the EU 's 
evidence is an unsupported blanket a ttack on the knowledge and background of the EU 's expert, 
who is a former high -ranking DOD official. These attacks are groundless, as already demonstrated 
in the expert 's curriculum vitae , and as further demonstrated in a supplemental statement 
exhibited w ith this submission. In contrast, the US First Written Submission is filled with assertion 
after assertion as to technologies ' lack of relevance to LCA; however, the United States never 
identifies whose opinions these are, and what background qualifies suc h individual(s) to make 
these judgements. None of these suggestions are backed up by any evidence or expert opinion 
whatsoever, and should be treated by the Panel accordingly .  
12. As for the US ' legal arguments that certain of the NASA, FAA, and DOD R&D m easures do 
not provide specific subsidies within the meaning of Articles 1.1(a), 1.1(b), and 2 of the SCM 
Agreement , they suffer from common flaws. With respect to "financial contribution ", the 
United  States attempts to distinguish certain of the measures before the compliance Panel from 
those found by the original panel and Appellate Body to provide financial contributions, based on 
legally irrelevant, and/or non -existent, alleged factual distinctions. With respect to "benefit ", the 
United States relies on  patent licenses between Boeing and the US Government providing the US 
Government with rights that it cannot lawfully use, and that take nothing of value away from 
Boeing. It also relies on a comparison of the US Government 's R&D contracts/agreements with 
"Contract D ", a contract between Boeing and a not -for-profit university that, even if it were a valid 
market benchmark, can not demonstrate "benefit ". At the same time, the United States ignores all 
of the other evidence of record demonstrating benefit thr ough actual market benchmarks and 
other alleged market benchmarks. With respect to specificity, while the European Union generally 
relies on the unappealed reasoning of the original panel, the US ' arguments depend on a 
mischaracterisation of the challenged  R&D subsidies, and on an aspect of the Appellate Body 's 
reasoning that is inapplicable to the measures before the compliance Panel.  
13. With respect to the FSC/ETI measures , Boeing continues to derive FSC/ETI tax benefits 
when it generates revenue from LC A exports, under the conditions specified in the December 2006 
Memorandum from the US Internal Revenue Service ( "IRS"). In its First Written Submission, the 
United States does nothing to refute or contest the European Union 's understanding of the current 
state of the FSC/ETI regime, generally, or the proper interpretation of the 2006 IRS Memorandum 
identified by the European Union. The European Union has also explained that if Boeing desired to 
legally commit itself to not take FSC/ETI tax benefits going fo rward, and to clarify the situation in 
the past, it could provide a simple statement, signed under penalties of perjury. The United States 
has failed to provide such a statement. Instead, it relies only on a statement from 20 July 2009 
that was provided to  the original Panel, a statement that obviously can not be considered evidence 
of what Boeing has actually received since 20 July 2009. Thus, it fails to address the key issue 
before the compliance Panel, whether Boeing continues to receive FSC/ETI benefit s today and in 
the future.  
14. As for the Wichita Industrial Revenue Bonds ( "IRBs"), the European Union has demonstrated 
that Boeing continues to receive tax exemptions through the year 2017 on the property associated 
with the IRBs at issue before the ori ginal panel. The United States now appears to argue that the 
subsidy has been withdrawn because Boeing "no longer receives IRBs ". Given that the continuing 
subsidy constitutes the tax breaks resulting from the IRBs previously issued, this argument does 
nothing to refute the EU 's demonstration that the subsidy continues. As for the specificity analysis 
under Article 2.1 of the SCM Agreement , the United States now argues that "there is no basis to 
consider that the amount issued to Boeing ( i.e., zero) is disp roportionately large " because the City 
of Everett has not issued any new IRBs to Boeing since 2007. The US ' proposed specificity analysis 
is fundamentally flawed for two reasons. First, the United States is defining the subsidy as the 
issuance of IRBs, eve n though the panel and Appellate Body found that the subsidy constitutes the 
tax exemptions flowing from IRBs. Second , the United  States bases its arguments regarding the 
granting of "disproportionately large amounts of subsidy to certain enterprises " on a five-year time 
period, thereby ignoring the programme 's 34 year history and the requirement in Article 2.1(c) 
that "account shall be taken of . . . the length of time during which the subsidy programme has 
been in operation ". 
15. Turning to Washington Sta te, the state and local authorities have failed to withdraw the 
subsidies at issue before the original panel. Instead, they have actually increased  the value of WT/DS353/RW/ Add.1  
 
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  many of those subsidies and introduced additional closely related subsidy measures. In particul ar, 
the following subsidies, which were found by the original panel to be specific subsidies, continue to 
be granted or maintained: (a) state Business & Occupation ( "B&O") tax rate reductions; (b) state 
B&O tax credits for preproduction development; (c) st ate B&O tax credits for property taxes; (d) 
sales and use tax exemptions for computer hardware, software, and peripherals; and (e) City of 
Everett B&O tax rate reductions. Further, the European Union demonstrated that (a) the State 
B&O tax credits for leas ehold excise taxes and (b) the Joint Center for Aerospace Technology 
Innovation, are specific subsidies that constitute "measures taken to comply " within the meaning 
of Article 21.5 of the DSU. In its First Written Submission, the United States generally c oncedes 
that the five measures before the original panel continue to provide specific subsidies, but argues 
that they are outside the scope of these proceedings (other than the state B&O tax rate 
reduction). With respect to the two additional measures – the B&O tax credit for leasehold excise 
taxes and the Joint Center for Aerospace Technology Innovation – the United States argues that 
they do not constitute specific subsidies, and are outside the scope of these proceedings. The 
European Union explains, in Section II, why the US scope -related objections fail. For the two 
additional measures, the European Union recalls that its arguments on existence of a specific 
subsidy are based on evidence and Appellate Body guidance, while the US arguments are based on 
unsupported assertions and interpretations of the SCM Agreement  that are contrary to the 
Appellate Body 's interpretations.  
16. Finally, the European Union addresses the massive subsidies from the State of South 
Carolina  and its political subdivisions for Bo eing's 787 final assembly facility (known as "Project 
Gemini ") and fuselage fabrication and integration complex (known as "Project Emerald "). South 
Carolina subsidies include: (i) providing Boeing with a long -term lease of government land for 
these facilit ies at $1 per year; (ii) providing Boeing with custom -built facilities and infrastructure 
funded by State general obligation bonds; (iii) providing Boeing with exemptions from state sales 
and use taxes for aircraft fuel, computer equipment, and constructio n materials; (iv) reducing 
Boeing 's corporate income taxes by approving a special income allocation and apportionment 
agreement, allowing Boeing to exclude income from sales destined for export from the calculation 
of its taxable income; (v) providing Boei ng with tax credits for new jobs as a result of designating 
Project Gemini and Project Emerald as part of a multi -county industrial park; (vi) exempting 
Boeing from property taxes on its modified 747 -400 "Dreamlifter " Large Cargo Freighters; (vii) 
providin g Boeing -specific workforce training, recruitment, and development programmes for 
Project Gemini; and (viii) reducing Boeing 's property tax liability through negotiated fee -in-lieu-of-
taxes agreements with Charleston County. The European Union responds to the US arguments, 
and demonstrates that these measures (as well as each of the recent amendments, extensions, 
and/or related measures) are each a specific subsidy within the meaning of Articles 1 and 2 of the 
SCM Agreement .  
17. Since the European Union su bmitted its First Written Submission, the State of South 
Carolina has provided additional subsidies for Boeing LCA, each of which constitutes an 
amendment, supplement, or extension of the South Carolina measures addressed in the EU 's panel 
request and Firs t Written Submission. These "Phase II " incentives, each of which constitutes a 
specific subsidy within the meaning of Articles 1 and 2 of the SCM Agreement , are (1) the sale of 
at-least 320 acres of government property adjacent to Boeing 's project site at less-than-market 
value; (2) funding the acquisition and preparation of land for B oeing with the proceeds of 
$120 million in state economic development bonds; and (3) the amendment of the Boeing Fee 
Agreement to provide for the reduction of Boeing 's propert y taxes related to its expansion. With 
respect to item (1), for example, despite the fact that the Charleston County Aviation Authority 
("CCAA ") appraised the 320 acre parcel at $27.6 million , and Boeing 's consultant appraised the 
property at $19.9 million , the CCAA ultimately sold that land to Bo eing for $12.5 million in 
April 2013. CCAA Land Sale Committee chairman Tommy Hartnett stated in response that "We 
sold our only asset at a bargain -basement price ", and referred to it as "foolish " to "let the land go 
at that price ".  
IV. PROHIBITED SUBSIDIES AND MEASURES INCONSISTENT WITH ARTICLE III OF THE GATT  1994   
18. The United States agrees with the legal standards set out by the European Union.  
19. First, the European Union recalls its demonstration that the FSC/ETI legislation and 
successor act subsidies continue, and that these precise measures have already been found to 
provide prohibited de jure  export -contingent subsidies to Boeing. The United States submission WT/DS353/RW/ Add.1  
 
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  that Boeing is not "using" the subsidies con ferred upon it is irrelevant and not substantiated by the 
United States. Second, the European Union demonstrates that South Carolina 's special income tax 
apportionment method for Boeing is also a prohibited de jure  export -contingent subsidy, as it 
excludes  certain Boeing sales from giving rise to taxable income on the condition that they are 
destined for export markets outside the United States. The United States contests only the 
existence of the subsidy, not the export contingency.  
20. Third, the European  Union demonstrates that the subsidies described in Section III are 
contingent in fact on actual and anticipated exportation, and therefore violate Articles 3.1(a) and 
3.2 of the SCM Agreement . It does so by showing that the ratio of both actual and antici pated 
Boeing sales are skewed towards exports in a manner not reflective of the conditions of supply and 
demand that would exist in the absence of the subsidies. This  is not contested by the 
United  States. Further, the European Union explains that the subs idies are geared to induce or 
incentivise this skewing; the United States conditions Boeing's behaviour by encouraging and 
directing Boeing to favour exports, and by rewarding Boeing when it complies. At the same time, 
Boeing has telegraphed a clear signal  back to the United States: keep granting or maintaining 
subsidies and we will keep exporting. The United States has thus come to associate subsidies with 
exports, and Boeing has come to associate exports with subsidies. The United States denies that 
this is happening, but fails to engage with any of the evidence provided by the European Union.  
21. Fourth, the European Union demonstrates that the subsidies are also contingent in fact upon 
the use of domestic over imported goods, and therefore violate Articl es 3.1(b) and 3.2 of the SCM 
Agreement . It does so by showing that the subsidies involve conditions that necessarily imply use 
of US goods. The European Union further shows that the United States favours the use of US 
domestic goods and labour, and conditi ons Boeing's behaviour by encouraging and directing 
Boeing to favour US domestic goods and labour, and by rewarding Boeing when it complies. The 
United States denies that this happening, but similarly fails to engage with any of the evidence 
provided by th e European Union.  
22. Fifth, and similarly, these same measures are applied so as to afford protection to domestic 
production of parts and materials capable of use in the production of Boeing LCA, in violation of 
Article III:4 of the GATT 1994  because, for  the same reasons that the measures are contingent on 
the use of domestic over imported goods, they afford less favourable treatment to imported like 
products. The United States submits that these matters are outside the scope of these 
proceedings, but doe s not contest the substance of the claims.  
V. ADVERSE EFFECTS  
23. The European Union also demonstrates that, in its First  Written Submission, the 
United  States fails to rebut the EU showing of present adverse effects caused by the non -
withdrawn US subsidi es. In fact, recent evidence shows that the market effects of the US subsidies 
continue to increase with the subsidy -enabled launch of the 787 -10, and with Boeing 's continued 
aggressive pricing strategy for the 737 MAX, 737NG and 787.  
24. The US attempt at  denying these effects in its First Written Submission is notable for three 
fundamental flaws: (i) its refusal to accept unconditionally the findings from the original 
proceedings regarding the technology effects of the US aeronautics R&D subsidies; (ii) i ts undue 
segregation of the US subsidies, which results in a US -advocated analysis that obfuscates the 
actual effects of these subsidies; and, (iii) a failure to engage comprehensively with the EU 
evidence of significant lost sales, price suppression and d isplaced or impeded market shares, or 
threat thereof. Moreover, the US Submission employs baseless scope objections to the EU 
arguments, and, while ignoring much of the EU evidence, provides little of its own.  
25. With respect to the legal framework guidin g the Panel 's analysis, however, the Parties are 
largely in agreement. The European Union notes that, contrary to the US position in EC – Large 
Civil Aircraft (Article 21.5 – US), the United States accepts that Article 7.8 of the SCM Agreement  
requires an analysis of present adverse effects caused by non -withdrawn subsidies. Moreover, the 
United States generally accepts that this involves demonstrating a "genuine and substantial " 
causal link between such non -withdrawn US subsidies and present adverse effect s. However, in its 
causation arguments involving all forms of adverse effects demonstrated by the European Union, 
the United States ignores that the standard requires that the subsidies be a genuine and WT/DS353/RW/ Add.1  
 
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  substantial cause  of the adverse effect. It is, there fore, insufficient for the United States merely to 
point to one or several non -attribution factor(s). Even if it had established that the factor(s) were 
a substantial cause of the market phenomenon at issue (which the United States often does not 
even try) , this would not preclude a finding that the subsidies are also a genuine and substantial 
cause of adverse effects.  
26. The United States agrees that the Panel should assess whether present adverse effects exist 
after the end of the implementation period, based on data going back to the end of the original 
reference period . However, the United States inappropriately relies on arguments that the 
European Union allegedly raised in the original proceedings as limitations on the scope of 
arguments that it can r aise with respect to the new reference period. For reasons stated above, 
this attempt must fail.  
27. Crucially, the United States agrees with the European Union 's identification of the key 
conditions of competition  in the LCA markets – conditions that the  Appellate Body found to 
facilitate the causing of adverse effects. In particular, the United States accepts the important role 
of innovation in the LCA industry, the significance of the Airbus/Boeing duopoly that characterises 
the competition, as well as the price -sensitive nature of many sales campaigns.  
28. With respect to the product markets at issue , the European Union established that there are 
four product markets that are relevant to these compliance proceedings: (i) the world market for 
new technol ogy single -aisle aircraft; (ii) the world market for existing technology single -aisle LCA; 
(iii) the world market for new generation wide -body (or twin -aisle) LCA; and, (iv) the world market 
for existing technology small wide -body (or twin -aisle) LCA. The United States expresses its 
disagreement with the EU product market delineation that is substantiated by the evidence. Yet, it 
does not provide any arguments explaining its disagreement, let alone arguments and evidence 
sufficient to establish an alternati ve product market delineation. In any event, none of the 
implications the United States draws from its unsubstantiated criticisms affect the validity of the 
EU adverse effects arguments. In particular, even if there were only one single -aisle product 
marke t, all single -aisle Boeing LCA in that market are subsidised and cause adverse effects. And 
whether or not the A330 competes in a product market separate from the 787, it is the US 
subsidies to the 787 that cause prices for the A330 to be significantly sup pressed.  
29. To avoid the inescapable conclusion that, collectively, the US subsidies cause adverse effects  
through their impact on Boeing 's product development and prices, the United States criticises the 
European Union for following the Appellate Body 's guidance from the original proceedings in this 
very dispute. The Appellate Body emphasised that, in light of the conditions of competition, 
including the duopoly nature of the competition, a panel must assess the collective effects of all 
relevant subsidie s on the LCA markets at issue. Contrary to that guidance, the United States 
advances arguments that segment and atomise the analysis of the US subsidies in precisely the 
manner that the Appellate Body found to constitute legal error.  
30. With respect to th e technology causal mechanism  of the non -withdrawn US aeronautics R&D 
subsidies, the EU First Written Submission demonstrated that it enabled Boeing to launch the 787 
as and when it did, and that it similarly allowed Boeing to launch its latest LCA develop ments, the 
737 MAX and the 787 -10, as and when it did. Rather than accep ting these findings, the 
United  States argues that, absent the US R&D subsidies, Boeing would have launched the 787 in 
2006, a mere two years later, with promised first deliveries for 2010. In support, the United States 
submits a report authored by certain Boeing engineers.  
31. That report is fundamentally flawed, however, because it asks the wrong question – i.e., 
how long it would have taken Boeing to "replicate " the research perform ed in the context of the US 
R&D subsidies. The relevant question is, instead, how long it would have taken Boeing to research, 
develop, mature, produce and certify technologies that Boeing did not know existed or were even 
feasible. Yet, even accepting, arguendo , the Boeing engineers ' counterfactual, the European Union 
submits a statement by Airbus engineers demonstrating that the Boeing engineering statement 
significantly underestimates the time it would take Boeing to replicate even just the research for 
the narrow subset of NASA - and DOD -facilitated technologies considered therein. Most 
significantly, however, the Boeing engineers ' report is flawed because it ignores the economic 
disincentives for Boeing to undertake and fund early -stage R&D of the kind f unded by the NASA 
and DOD aeronautics R&D subsidies. The Boeing engineers ignore the financial consequences of 
undertaking such research at a very late stage, just prior to product development – in particular, WT/DS353/RW/ Add.1  
 
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  increased development costs, postponed revenue s and dramatically increased risks, each of which 
calls into question the financial viability of the project. An assertion that Boeing could "replicate " 
the 787 without the US subsidies, but which fails to take account of these financial consequences 
on the business case for the aircraft, is neither realistic nor credible.  
32. Finally, the Airbus engineers also demonstrate that the Boeing engineers have failed to 
undermine the links identified by the European Union between the US R&D subsidies and 
technolo gies Boeing applies on the 787, including the 787 -10, the 737 MAX and the 777X.  
33. Turning to the price causal mechanism  of the US subsidies, the European Union 
demonstrated, in its First Written Submission, how the structure, operation, design, and 
magni tude of each of the subsidies at issue confirmed the existence of a "genuine " and substantial 
causal link; and how the present conditions of competition in the LCA markets reinforce and 
confirm Boeing 's strong incentive to use these subsidies, collectively , to lower its LCA pricing in 
competitive sales campaigns. The European Union rebuts the US assertion that it is unclear which 
subsidies should be aggregated for purposes of assessing the price effects on each of the Boeing 
products at issue. Next, it rebu ts the US assertions regarding the magnitude of the subsidies, 
which are principally driven by (i) the undue segregation of the US analysis; (ii) flawed US 
calculations; and, (iii) flawed objections as to the scope of the subsidies that can be considered. 
The European Union also clarifies that it is not double -counting when it argues that certain  US R&D 
subsidies impact Boeing 's prices under the price causal mechanism, while others  affect Boeing 
technological capabilities and, hence, the quality of its prod ucts, under the technology causal 
mechanism.  
34. Based on the analytical framework and the evidence establishing the technology and price 
causal mechanisms, the European Union turns to its arguments establishing that, collectively, the 
non-withdrawn US sub sidies presently cause present adverse effects.  
35. With respect to the effects of the US subsidies benefitting Boeing 's 787 and 777X , the 
European Union recalls the evidence establishing how the US subsidies affect the quality of these 
aircraft and their pricing.  
36. As the original panel found, the subsidies benefitting the 787 significantly suppress prices for 
the A330 . The United States does not argue otherwise, but asserts that the European Union is 
precluded from making this argument, because the 787  and the A330 presently compete in 
different product markets. This is wrong. Where, as here, the lack of the A330 's ability presently to 
exercise significant competitive constraints on the 787 is attributable to the US subsidies, the 
Panel must find that t he effect of the subsidies is significant price suppression in the same market 
in which the A330 competes.  
37. Similarly, the US subsidies cause prices for the A350XWB to be significantly suppressed . The 
European Union rebuts the US argument that the conv ersion of the Original A350 to the A350XWB 
cannot be attributed to the US subsidies. In any event, the European Union also demonstrates that 
Airbus ' decision to launch the A350XWB mitigated the degree of adverse effects in the market. In 
addition, the evid ence demonstrates that prices for A350XWB LCA sold to all other customers are 
also significantly suppressed. The US criticism of the EU family -based pricing data is unwarranted, 
the United States having itself submitted such data, and the US arguments rega rding 787 pricing 
and other factors affecting prices of the A350XWB are flawed and unsubstantiated. The existing 
significant suppression of A350XWB prices, along with the recent launch of the 787 -10 and the 
imminent launch of the 777X, also demonstrate a t hreat of significant price suppression for the 
A350XWB.  
38. Moreover, the US subsidies benefiting the 787 cause Airbus to lose significant sales of its 
A350XWB . The United States has neither removed the adverse effects from those sales already 
found to be lost in the original proceedings, nor established any valid basis to undermine the EU 
showing that new sales are lost due to the US subsidies. In fact, the US evidence actually supports 
the EU arguments that the subsidy -enabled 787 's technology, availabili ty and pricing were 
substantial causes of the lost sales at issue. Moreover, the US scope objections regarding sales left 
unresolved in the original proceedings fail, and with respect to new sales, the United States cannot 
substantiate its proposed non -attribution factors, and in any event fails to demonstrate that the US WT/DS353/RW/ Add.1  
 
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  subsidies are not also a genuine and substantial cause of the lost sales, as required by the 
applicable causation standard.  
39. Nor does the United States undermine the EU showing that the  US subsidies cause 
impedance, or threat thereof , in the US and several third country markets. The United States errs 
when it denies the relevance of sales campaign evidence to understand the sales volumes and 
market share trends provided by the European U nion. The United States also errs when asserting 
that it is irrelevant that, with its 787, Boeing, as the subsidised manufacturer, holds significantly 
more than 50 percent of the market. In fact, this is an indication that subsidies are impeding the 
A350XW B's market share.  
40. Turning to the US subsidies benefitting the 737 MAX , the European Union recalls the 
evidence establishing how the US subsidies affect the quality of these aircraft and their pricing. 
Along with evidence of Boeing 's sustained and subsi dy-enabled aggressive pricing strategy for the 
737 MAX, this has resulted in significant lost sales of Airbus ' A320 neo LCA . As with its arguments 
regarding the 787, the United States fails to substantial its proposed non -attribution factors, and in 
any ev ent fails to demonstrate that the US subsidies are not also a genuine and substantial cause 
of the lost sales, as required by the applicable causation standard.  
41. The US arguments regarding the A320neo 's significantly suppressed prices  similarly fail, 
because (i) the US criticism of the EU family -based pricing data is unwarranted, having itself 
submitted such data, and (ii) the US arguments regarding other factors affecting prices of the 
A320neo are flawed and unsubstantiated.  
42. Nor does the United St ates undermine the EU showing that the US subsidies cause a  threat 
of impedance  in the US and several third country markets. Again, it erroneously denies the 
relevance of sales campaign evidence and the significance of the fact that Boeing and its 
subsidis ed 737 MAX hold a market share significantly higher than 50 percent in large volume 
markets.  
43. Finally, with respect to the US subsidies benefitting the 737NG , the European Union recalls 
the evidence establishing how these subsidies affect pricing. The result is significant lost sales  of 
Airbus ' A320ceo LCA, which the United States fails to undermine by mere reference to 
unsubstantiated non -attribution factors. With respect to the significant price suppression  
experienced by the A320ceo, the United State s, again, relies on an unfounded criticism of EU -
provided family -based pricing information, while the United States itself provided data on a similar 
basis. And with respect to displacement and impedance, and threat thereof , the United States 
again fails t o recognise the relevance of sales campaign evidence and the sales volume and market 
share data provide by the European Union.  
VI. CONCLUSION AND RELIEF SOUGHT  
44. Nothing in the US First Written Submission changes the EU 's conclusion and request for 
relief, as set out in the EU First Written Submission.  
 WT/DS353/RW/ Add.1  
 
- B-19 - 
 
  ANNEX B -3 
EXECUTIVE SUMMARY OF  THE OPENING STATEMEN T 
OF THE EUROPEAN UNIO N AT THE PANEL MEETI NG 
Contains no BCI or HSBI  
I. INTRODUCTION  
1. Despite the rulings and recommendations of the Dispute Settlement  Body, the situation 
faced by the European Union and Airbus as a result of the US subsidies has not been remedied, 
but has instead worsened . US federal, state, and local authorities have not only failed to withdraw 
the subsidies or remove the adverse effec ts, but they have actually significantly increased  those 
subsidies and worsened  the adverse effects caused by those subsidies. And, new evidence of the 
United States ' disregard for the DSB 's rulings and recommendations seems to appear on a regular 
basis.  
II. SCOPE  
2. In response to a request from the Panel for further comments on whether procurement 
contracts funded under the 23 original US Department of Defense ( "DOD") Research, 
Development, Test, & Evaluation ( "RDT&E ") program elements ( "PEs") are withi n the scope of 
these compliance proceedings, the European Union recalls that the Appellate Body adopted a 
different approach from that requested in the EU and US appeals, which rendered both appeals 
moot. After declaring moot the original panel 's finding t hat DOD procurement contracts are 
purchases of services and excluded from Article 1.1(a)(1), the Appellate Body did not complete the 
analysis, observing that neither  party  had requested it to do so. Moreover, the Appellate Body 
could not have completed the  analysis, as it is prohibited from making findings of fact.  
3. Accordingly, there is neither a factual basis for the US scope argument that, because the 
European Union did not request completion of the analysis, the compliance Panel is prohibited from 
ruling on the substance of the EU claims relating to these measures, nor has the United States 
provided a basis in the treaty text. The reasoning of EC – Bed Linen (Article 21.5 – India)  is also 
inapplicable in these circumstances.  
III. SUBSIDY PROGRAMMES  
A. NASA, DOD, and Federal Aviation Administration ( "FAA") R&D Programmes  
4. It is business as usual at NASA and DOD, where NASA still expresses its aeronautics mission 
as "conducting research that, when transferred to the U.S. aviation industry, can help main tain 
competiveness in the global market ". And DOD continues to provide billions of dollars in R&D 
funding and support that benefits Boeing 's LCA development, after having abandoned its pre -1992 
policy of "recover{ing} a fair share  of its investment in nonr ecurring costs related to products, 
and/or a fair price  for its contribution to the development of related technology, when the products 
are sold, and/or when technology is transferred " in order to "assist the U.S. defense industry to be 
more competitive o n a global basis ". 
5. The central US measures taken to comply, Boeing 's donation to the US Government of 
license rights for a limited number of patents that it knows the US Government can not use , is 
entirely worthless. The US Government is not in the busi ness of making or selling aircraft -related 
products for commercial sale, nor does it have Congressional authorisation to establish such a 
business. Congress could not even do so because it would violate the US Constitution. As the US 
Supreme Court has expl ained, "{e}very law enacted by Congress must be based on one or more 
of those powers " specifically enumerated in Article I of the US Constitution. No power enumerated 
in Article I authorises the US Government to compete in commercial aviation markets. Unde r the 
US Supreme Court 's jurisprudence, the US Congress 's authority to "regulate " commerce under the 
Commerce Clause of Article I does not empower the US Government to engage in commerce itself, 
nor does the Necessary and Proper Clause provide such authori ty.   WT/DS353/RW/ Add.1  
 
- B-20 - 
 
  6. At the Panel 's request, the European Union also addresses the implication for this dispute of 
the Appellate Body Report in Canada – Feed-in Tariff Program . Contrary to the US contention, 
there is nothing in that Appellate Body Report providing tha t a panel – after it has already found 
that a measure affirmatively falls into one or more of the subparagraphs of Article 1.1(a)(1) – 
should then consider whether a measure may also be classified as a type of transaction that is not 
listed in Article 1.1( a)(1) (such as a "purchase of service "). Likewise, the brief mention of a "price 
discovery mechanism " in the benefit analysis of Canada – Feed-in Tariff Program  fails to 
undermine the Appellate Body 's understanding in this dispute of the relevant market be nchmarks 
for R&D measures. Even if there were a purchase of goods (or services), Canada – Feed-in Tariff 
Program  involved a competitive market for the supply of a fungible commodity, which does not 
exist for NASA, DOD, and FAA R&D contracting.  
7. The char acteristics of the NASA procurement contracts and DOD assistance instruments 
before the original panel, as well as the Appellate Body 's evidence for completion of analysis on 
benefit, are highly relevant to the analysis of the other R&D measures, because t he principal 
characteristics, design, and operation are essentially the same .  
8. The European Union also submits an expert statement on market benchmarks for R&D 
contracting, authored by Dr. Richard Razgaitis, who has more than 45 years of experience in t he 
technology and intellectual property licensing fields. In his statement, Dr. Razgaitis confirms that 
Boeing receives more as a party commissioned to do R&D by the US Government than would a 
commissioned party in a market -based transaction , and that the US Government receives less as a 
commissioning party than would a commissioning party in a market -based transaction.  
9. Finally, the European Union recalls that, while the United States appears to rely on raw 
assertions to support claims that the DOD RDT&E  PEs have no technical relevance to LCA, the US 
defends itself by noting that its submissions were drafted in consultation with unidentified DOD 
scientists and other DOD personnel. However, these unidentified "experts " have demonstrated a 
lack of knowledge  about LCA -relevant technologies in, for example, arguing that LCA "seek to 
avoid cruise " speed above Mach 0.85. Yet, in fact, Boeing had previously offered the Sonic Cruiser 
LCA model to airlines, which was supposed to travel at speeds of Mach 0.95 to 0.9 8. 
B. Foreign Sales Corporation/Extraterritorial Income ( "FSC/ETI ") Tax Exemptions  
10. The United States has conceded that Boeing is eligible to receive the continuing FSC/ETI 
benefits, and it is, therefore, reasonable for the Panel to infer that Boeing wo uld take full 
advantage of the tax breaks for which it is eligible. While the United States asserts that Boeing is 
not presently using the FSC/ETI subsidy, it has not provided any evidence to support that 
proposition, nor stated that Boeing has committed n ot to obtain FSC/ETI benefits in the future.  
C. Wichita, Kansas Industrial Revenue Bonds ( "IRBs") 
11. The US does not contest that the Wichita IRBs continue to provide subsidies to Boeing 
through the ongoing tax exemptions associated with the IRBs. The Uni ted States, however, argues 
that the Panel should now limit its consideration of specificity to the 2008 -2013 period, a period 
during which Boeing continues to enjoy the tax benefits from previously issued IRBs but has not 
received any new IRB. This direct ly contradicts Article 2.1(c) of the SCM Agreement , which plainly 
requires accounting of the "length of time during which the subsidy programme has been in 
operation ", and does not allow for a skewed glimpse at an anomalous period for the longstanding 
programme.  
D. Washington State and Local Subsidies  
12. With respect to the Washington State and local subsidies, the European Union has 
demonstrated that the state and local authorities in Washington State have failed to withdraw the 
subsidies at issue before the original panel. Instead, they have actually increased  the value of 
many of those subsidies and introduced additional closely related subsidy measures, such that the 
multi-billion dollar stream of past and future expected subsidies has an even greater i mpact on 
Boeing LCA. The primary disagreement in on valuation, yet the United States inexplicably refuses 
to authenticate or explain any of its proposed numbers, which appear to come out of thin air.  WT/DS353/RW/ Add.1  
 
- B-21 - 
 
  E. South Carolina State and Local Subsidies  
13. South C arolina is providing Boeing with billions of dollars in subsidies to assist with 
production and assembly of the 787 in North Charleston, and it is expanding the package of 
subsidies on a regular basis. These subsidies include a lease of more than 240 acres  of public land 
for up to 30 years, at a cost to Boeing of only one dollar  per year. On this site, South Carolina is 
providing Boeing with custom -built facilities and infrastructure worth hundreds of millions of 
dollars for which Boeing pays nothing in ret urn. South Carolina and Charleston County also provide 
Boeing with tax breaks worth more than $900 million, including a de jure  export contingent 
subsidy.  
14. The United States, however, would have the Panel believe that these incentives do not 
involve So uth Carolina providing anything of value to Boeing, but rather Boeing providing a benefit 
to the state. It similarly uses using the value provided by one subsidy to obscure the existence of 
another subsidy. Consider this: South Carolina provides hundreds o f acres of land for Boeing at $1 
per year; South Carolina uses bond proceeds to prepare the land for Boeing; and the United States 
argues that there is no subsidy because the land had to be prepared. This simply cannot be 
correct. Finally, on the tax measu res, the United States essentially repeats the same failed 
arguments it made with respect to the Washington State B&O tax rate reductions in the original 
proceedings.  
IV. PROHIBITED SUBSIDIES AND VIOLATIONS OF ARTICLE III OF THE GENERAL AGREEMENT ON TARIFF S 
AND TRADE ("GATT ") 1994  
15. With respect to the EU 's "in fact " prohibited subsidy claims, there is no dispute  between the 
Parties as to the legal framework, that skewing towards exports has occurred, that this skewing is 
greater in the presence of the su bsidies, and that there are no relevant non -attribution factors. 
The US ' only defence is that the EU 's evidence does not demonstrate encouragement or reward. 
Thus, the compliance Panel should review the evidence and, unless the Panel finds no indication of  
encouragement or reward (and remembering that there is no de minimis  rule for export continent 
subsidies), should confirm the EU claim.  
V. THE US SUBSIDIES CONTINUE TO CAUSE ADVERSE EFFECTS  
16. The European Union demonstrated that the United States fail s to meet its obligation under 
the second prong of Article 7.8 of the SCM Agreement  because the non -withdrawn and new 
subsidies cause present adverse effects to the European Union and Airbus. Collectively , the non -
withdrawn and new US subsidies (i) improve  Boeing 's product offering, and (ii) lower Boeing 's 
prices in a manner that is a genuine and substantial cause of adverse effects. The resulting 
adverse effects manifest in numerous sales that Airbus lost to Boeing, as well as in suppressed 
prices and disp laced or impeded market shares. These effects will magnify in the coming years 
with Boeing 's recent launches of the 737 MAX, the 787 -10, and its imminent launch of the 777X.  
17. The US assertion of achieved compliance cannot overcome the EU evidence of pre sent 
adverse effects because it is flawed in three fundamental ways. First, the US arguments ignore 
most of the subsidies at issue and even contend that adding  allegedly lower annual amounts of 
post-2007 R&D subsidies resulted in a reduction  in subsidies r ather than an increase  of the pool of 
subsidies. Second , the United States asserts that the Panel must ignore the expansion of subsidies 
and harm based on "scope " objections that the European Union has demonstrated to be without 
merit. Third, the United St ates challenges the very causal mechanisms found in the original 
proceedings.  
A. Threshold issues  
18. The United States has failed to present arguments or evidence rebutting the EU market 
delineation. In these circumstances, the Panel should proceed to ma ke an objective assessment of 
the EU arguments and evidence before it, and find that they support the proposed product market 
delineation. Moreover, even accepting the few unsupported US criticisms would not undermine the 
EU's adverse effects claim.  WT/DS353/RW/ Add.1  
 
- B-22 - 
 
  B. Causal mechanisms  
19. The European Union emphasised that, as in the original proceedings, there are two 
independent causal mechanisms: first, the US subsidies enable and/or accelerate Boeing 's 
development of innovative technologies for its aircraft ( "technolo gy causal mechanism "); and, 
second, the US subsidies enable Boeing to significantly lower its prices in strategic sales campaigns 
("price causal mechanism ").  
1. Technology causal mechanism  
20. At the Panel 's request, the European Union addresses the relev ance of the original panel 's 
counterfactual findings that the US R&D subsidies accelerated the launch of the 787. This 
counterfactual applies to the pre -2007 R&D subsidies at issue in the original proceedings but not to 
the post -2007 R&D subsidies. The US assertions regarding the counterfactual for the pre -2007 
R&D subsidies – that Boeing would have needed only two years of additional pre -launch R&D 
without subsidies – are without merit. They are inconsistent with the original panel 's 
counterfactual finding s, and are not credible because, as recognised by Boeing engineers outside 
this dispute, Boeing would have needed many more years to develop and mature the technologies 
for actual use on the 787.  
2. Price causal mechanism  
21. The European Union further de monstrated that the state and local subsidies, as well as 
certain US R&D subsidies, affect Boeing 's prices. Again, the EU arguments and evidence followed 
the findings in the original proceeding. The US assertion that the European Union should have 
adopted an entirely different analysis, taking into account (the alleged absence of) capital 
constraints on Boeing, is without merit. In the original proceedings, the Appellate Body found that 
certain subsidies caused Boeing to lower its LCA prices, resulting in a dverse effects, without 
considering whether Boeing was or was not capital constrained.  
22. The European Union emphasises that it clearly identified the R&D subsidies it considers to 
affect Boeing 's prices. It recalls the original panel 's finding on how pre -2007 US R&D subsidies 
affected Boeing 's knowledge base (reducing risks, complementing internal R&D efforts, developing 
and allowing leverage of knowledge, skills, and technical capabilities), ultimately enabling the 
launch of the 787. Only a small fractio n of post -2006 R&D subsidies has manifested in the form of 
new technologies appearing on Boeing LCA marketed today and, thus, causes adverse effects 
through the technology causal mechanism. However, all of these post -2006 R&D subsidies already 
have an impa ct on the LCA market through the price causal mechanism.  
23. Recalling the finding of the original panel and the Appellate Body that technology 
development naturally builds upon predecessor technologies, the European Union explains that, 
when Boeing build s upon NASA - and DOD -funded technologies without paying license fees for the 
value of that technology, its overall costs are decreased. In much the same way it enjoys  cost 
savings resulting from other subsidies, Boeing can and does pass these savings on to  customers 
for its existing LCA in the form of lower prices. In other words, the post -2006 R&D subsidies that 
have not yet manifested in the form of new commercialised technologies, cause adverse effects 
through the price causal mechanism, because they gen erate valuable early stage technology and 
knowledge that Boeing may use free of charge , without incurring license fees.  
24. The European Union further explains that, in contrast to the US assertions, the present 
collective  magnitude of the non -withdrawn U S subsidies available to Boeing for pricing down LCA 
in strategic, price -sensitive sales campaigns is substantial. Assessing all of the US subsidies in 
three "aggregate " groups is appropriate, in light of their strong similarities in design, structure, 
and operation, their nexus to subsidised Boeing LCA, and their shared causal mechanism. 
Moreover, an assessment of the "collective effects " of the three groups of subsidies and the two 
causal mechanisms is warranted in light of the demonstrated "genuine " causal link between these 
subsidies and their adverse effects.  
C. Specific forms of adverse effects  
25. The European Union identified the specific causal mechanisms of the US subsidies benefiting 
Boeing 's 787 and 777X family LCA (enabling lower prices, earli er availability, and the improved 
technology of those aircraft), Boeing 's 737 MAX family LCA (similarly enabling a markedly earlier WT/DS353/RW/ Add.1  
 
- B-23 - 
 
  availability of that aircraft, with better technology, and at lower prices), and Boeing 's 737NGs 
(enabling lower pricing). I n each case, they cause significant lost sales, significant price 
suppression and displacement/impedance.  
 WT/DS353/RW/ Add.1  
 
- B-24 - 
 
  ANNEX B -4 
EXECUTIVE SUMMARY OF  THE CLOSING STATEMEN T 
OF THE EUROPEAN UNION AT TH E PANEL MEETING  
Contains no BCI or HSBI  
I. INTRODUCTION  
1. During th e course of this Panel meeting, the United States helped to highlight the strength 
of the EU arguments and evidence in this compliance phase of the dispute. From the confirmation 
that the centrepiece of their declared measures taken to comply will never ha ve any impact on 
Boeing or the US Government, to the continued reliance on the same failed arguments that the 
United States advanced before the Appellate Body, the United States has clarified that it simply 
has no basis, either in fact or in law, to rebut the European Union 's robust prima facie  case.  
II. R&D  SUBSIDY  PROGRAMMES  
A. The US ' alleged compliance measure  
2. The European Union recalls its explanation of Boeing 's donation to the US Government of 
"worthless " license rights for a limited number of pa tents that the US Government cannot use . We 
further explained that, even if the US Congress wanted to provide NASA and DOD with the ability 
to use such rights, it could not do so because any such legislation would violate the US 
Constitution. Because the m eaning of domestic law, including of the US Constitution, is a question 
of fact for a WTO panel, the United States must rebut the EU 's interpretation with actual evidence 
and argument regarding US law.  
3. In responding to questions from the Panel, the US h as provided even more insight into the 
nature of the key US declared measure taken to comply. First, the United States explained that the 
US Government did the best it could do in difficult negotiations with Boeing to get some of its IP 
rights back, but th at the "donation " is so limited because Boeing would not give up more. That 
helps to explain why, as detailed by Dr. Razgaitis, the license from Boeing takes away everything 
in the second clause that it appears to provide in the first clause. Just as domes tic law is no excuse 
for violations of international law, the bargaining position of the recipient of billions of dollars in 
massive subsidies is also not an excuse for the US massive non -compliance.  
4. Second , the United States has now candidly declared t hat, to the extent the US genuinely 
believes it has gained any IP rights from the NASA -Boeing and DOD -Boeing license agreements, 
the US Government "has no intention to exercise that right ". In other words, it has no intention of 
ever even attempting  to mak e use of these license agreements.  
5. Thus, with respect to the R&D subsidies subject to the rulings and recommendations of the 
DSB, this settles the issue – the US has not complied with its obligations to withdraw those 
subsidies.  
B. Benefit  
6. During t he course of this Panel meeting, the parties have discussed the question of whether 
a finding of "benefit " for the R&D contracts and agreements at issue requires looking beyond the 
systematically skewed allocation of IP rights in those measures. In particu lar, the Panel has asked 
whether one must consider additional terms of the US Government R&D contracts, including inputs 
by Boeing, before determining whether a benefit exists. As the original panel and Appellate Body 
have already found "benefit " with resp ect to the pre -2007 NASA procurement contracts and DOD 
assistance instruments, this question relates only to the other R&D subsidies.  
7. In fact, the Appellate Body in the original proceedings had already considered this question 
with respect to DOD assist ance instruments, rejecting the US Government 's arguments that the WT/DS353/RW/ Add.1  
 
- B-25 - 
 
  funds provided by Boeing towards the joint ventures cancelled out any benefit provided by the 
systematically skewed IP allocation. Indeed, because the allocation of rights is systematically  
established by US law, the amount of any ex ante contribution by Boeing cannot  change the 
distribution of patent rights under the R&D contracts or eliminate the benefit inherent in the 
architecture of these measures.  
8. In contrast, this is clearly not what happens in market transactions, as Dr. Razgaitis explains 
in his expert statement. In the market, when the respective inputs from the commissioning and 
commissioned parties change, the allocation of IP rights also changes. And, in the market, because 
the outcome of R&D is uncertain, the commissioning party retains at least  a non -exclusive license 
to use the resulting patented inventions and a valuable exclusive option for an exclusive license .  
9. Under the US Government contracts, regardless of differe nces in the distribution of inputs 
and outputs beyond IP, the distribution of IP is always the same, and it is always more favourable 
to Boeing than it is to any commissioned party in the market, and less favourable to DOD than to 
any commissioning party i n the market. There is no circumstance in the market where the relative 
input of the commissioning party is so low, and the relative input of the commissioned party so 
high, that it would produce a distribution of IP rights as skewed in favour of the commi ssioned 
party as the US Government R&D contracts are for Boeing.  
10. In the market, when a commissioning party simply does not have a commercial interest in 
using the intellectual property developed through the joint venture, as the United States claims i s 
the case with the US Government, a commissioning party gives up the right to derive value from 
exploiting the IP only in exchange for obtaining something similarly valuable, such as royalties , 
from the other party. DOD, by contrast, give up its IP rights  for nothing; and Boeing pays nothing 
for this.  
11. As the development of technology and IP is the whole purpose of the R&D contracts, this 
necessarily leads to a finding that benefit exists, as was well understood by the Appellate Body.  
III. THE  US SUBSID IES CONTINUE  TO CAUSE  ADVERSE  EFFECTS   
A. Product markets  
12. The United States contends that, despite undisputed market changes since the end of the 
original 2004 -2006 reference period, the Panel should, by default, apply a historical market 
delineation f rom seven to ten years ago. This position must be rejected because it is legally 
flawed. During the course of this Panel meeting, the United States did not cite any authority for 
this proposed "default " rule. Nor does it explain how adopting it could even qualify as an objective 
assessment of the facts, given that the present markets include aircraft, such as the A320neo, 737 
MAX, 777X, and the 787 -10, that did not exist in the original reference period and for which there 
are no product market findings . Moreover, the proposed "default " rule is irreconcilable with the US 
argument in EC – Large Civil Aircraft , that current LCA compete in three  markets: (i) one market 
for single -aisle aircraft; (ii) one market for wide -body aircraft; and, (iii) one market for very large 
aircraft (not at issue in these proceedings).  
13. Recalling that it has demonstrated a product market delineation based on extensive 
quantitative and qualitative evidence and rigorous analyses, the European Union emphasises that 
the US criticis ms thereof are without merit and fail to rebut the EU product market delineation. As 
an example, the US complaint that Mr. Mourey conducts NPV analyses only for aircraft which are 
similarly sized, but do not closely compete, and not for aircraft which do closely compete, ignores 
the extensive EU evidence and testimony from Mr. Mourey confirming the close competitive 
relationship between such aircraft – including undisputed evidence of close price -sensitive 
competition in numerous recent sales campaigns; tes timony regarding Airbus ' market experience 
and customer perceptions of the competitive relationships between these aircraft; and evaluations 
of the physical and performance characteristics of such aircraft.  
14. In any event, whether the Panel adopts the U S three product market delineation, or the 
more nuanced EU product market delineation, this would have no impact on the EU adverse effects 
claims.  WT/DS353/RW/ Add.1  
 
- B-26 - 
 
  B. Technology causal mechanism  
15. Recalling the significant differences between the Parties regarding the na ture of the 
counterfactual for the technology causal mechanism, the European Union stresses that the US errs 
when asserting that the counterfactual can be reduced to a question of simply accelerating  the 
launch of the 787. The European Union recalls that t he original panel found, and the Appellate 
Body confirmed, that the counterfactual question is one of both acceleration and enhanced 
technologies.  
16. Regarding the question of acceleration, the European Union emphasises that technology 
effects do not simp ly cease once the 787 is launched, but that the important question is when 
Boeing could promise delivery  of the aircraft. In other words, the question is at what time Boeing 's 
first 787 delivery would have occurred without the technological leg up from the  US R&D subsidies. 
The timing of product launch varies from programme to programme and can take account of 
considerations such as the success of competing products. Delivery dates, on the other hand, are 
crucial for airlines ' purchasing decision as demonst rated by the fact that, for airlines, later delivery 
slots mean higher operating costs (where older aircraft are being replaced), or profits forgone 
(where aircraft with larger capacity or additional aircraft are ordered).  
17. The European Union further de monstrated that the US suggestion that without the R&D 
subsidies, Boeing would have needed only two additional years of 787 pre -launch R&D, which 
would have allowed first deliveries at least in 2010, is baffling and implausible. The original panel 
found th at the United States funded R&D that Boeing would not have undertaken absent the US 
subsidies. Moreover, the United States asserts that, in addition to two years of pre -launch R&D, it 
would only have taken Boeing engineers another four years (or less) to m ature, produce, certify 
and deliver not just the array of novel, innovative individual technologies included on the 787, but 
also to combine  those innovations to ensure that they interact optimally. It is implausible that 
Boeing could have overcome the lar ge economic disincentives and packed all the necessary 
research and development work in only six years.  
18. The implausibility of the US counterfactual is confirmed by a comparison with the timeline 
for the Airbus A350XWB – a comparison that the United St ates itself suggested during this Panel 
meeting. The European Union recalls that it has demonstrated that it will take Airbus much longer 
than the six -year period asserted by the US, for the 787, to move the A350XWB from pre -launch 
R&D to first delivery. T his is all the more significant since, as benchmarks go, Airbus ' experience 
with the A350XWB is extremely conservative. While offering similar economics, the technology 
solutions  on the A350XWB, in particular its four -panel composite fuselage, are consider ed lower 
risk and more conventional compared to the innovative full fuselage barrel of the 787. In addition, 
the A350XWB 's systems architecture is more conventional than the 787 's more electric systems. 
This suggests that, in a counterfactual world without  subsidies, it would have taken Boeing, for the 
787, considerably longer, rather than considerably less time, than it has taken Airbus, for the 
A350XWB, to progress from pre -launch R&D to first delivery.  
C. Price causal mechanism  
19. The European Union rec alls that, in the Oral Statement of this Panel Meeting and earlier 
submissions, it not only identified the particular US subsidies operating through a price causal 
mechanism and the particular Boeing aircraft to which each of these subsidies are linked, bu t also 
clarified which of these subsidies should be aggregated and identified the magnitude for each 
subsidy. Noting that, in terms of financial contribution, the subsidies total many billions of US 
dollars, the European Union emphasises that – contrary to  the repeated US assertions – the 
annual average amount of the financial contributions has significantly increased, compared to the 
time period at issue in the original proceedings.  
20. During the course of this Panel meeting, the United States complained  that EU arguments 
concerning the subsidies ' adverse effects differ from those raised in the original proceedings. The 
European Union explains that, in general, it is difficult to understand why the United States 
believes that the European Union is legally  bound to prior arguments that do not fully account for 
the different facts and circumstances presently at hand. Moreover, it is difficult to understand how 
the European Union could make different arguments in the original proceedings about new post -
2006 R &D subsidies that were not even at issue in those proceedings.  WT/DS353/RW/ Add.1  
 
- B-27 - 
 
  21. Additionally, the European Union highlights the important distinction with regard to the 
timing of the subsidies relative to these proceedings. Whereas for older R&D subsidies, resulting 
technologies are applied on currently marketed Boeing LCA, for more recent R&D subsidies, the 
resulting technologies are generally still being matured by Boeing, for application on future LCA. 
This difference has an impact on the way in which the effects of  the R&D subsidies manifest, but 
does not change anything about the fact that both types of subsidies enhance Boeing 's 
competitiveness by providing Boeing access to technology. Whether the present effect of the 
subsidy is (i) technology manifesting on Boei ng LCA marketed today, or, instead, (ii) cost -free 
access to technology pending maturation, the prejudice to Airbus ' competitive position comes in 
equally actionable present adverse effects under Article 6.3 of the SCM Agreement . 
 
_______________  
 
 
 WT/DS353/RW/ Add.1  
 
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  ANNEX  C 
ARGUMENTS OF THE UNI TED STATES  
Contents  Page  
Annex C -1 Executive Summary of the first w ritten  submission of the United States  C-2 
Annex C -2 Executi ve Summary of the second written submission of the United States  C-10 
Annex C -3 Executive Summary of th e statement of the United States at the Panel meeting  C-18 
 WT/DS353/RW/ Add.1  
 
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  ANNEX C -1 
EXECUTIVE SUMMARY OF  THE FIRST WRITTEN SUBMIS SION  
OF THE UNITED STATES  
INTRODUCTION  
1. Much has changed since 2006, the last year covered by the original panel's findings in US – 
Large Civil Aircraft . The National Aeronautics and Space Administration ("NASA") and U.S. 
Department of Defense ("DoD") have both dramatically reduced the number and value of the types 
of research transactions with Boeing that were found to be inconsistent wit h the SCM Agreement – 
NASA by more than half, and DoD by even more. But even more significantly, NASA has changed 
the way it conducts research, setting research objectives through an open and transparent 
process, focusing more on early stage foundational r esearch, eliminating restrictions on the 
government's data rights, and otherwise committing to make more results available more quickly. 
NASA and DoD also renegotiated the division of intellectual property rights under the contracts and 
agreements covered by the original panel and Appellate Body findings so as to make them 
consistent with commercial transactions. And the City of Wichita has ceased granting Industrial 
Revenue Bonds to Boeing. Through these actions, the United States has either withdrawn the 
relevant subsidies or taken appropriate steps to remove their adverse effects. The United States 
has accordingly complied fully with the recommendations and rulings of the DSB.  
2. The EU ignores these new facts. It does not grapple with the changes in how  NASA performs 
research and, accordingly, never makes the legal showing that it considers critical to its prima 
facie case, namely, that NASA's current transactions, as they occur in 2013, are subsidies. 
Although six and one -half years have passed, the EU starts with the assumption that the old 
aeronautics R&D subsidies are having exactly the same effects today that they did it 2006, ignores 
the nature of those effects and important changes that have taken place in the interim, and then 
proposes that in act uality, those effects actually grew. It gives these supposed developments 
ominous -sounding epithets – "sleeper" effects and "spillover" effects – but cannot hide that this 
notion of old technologies becoming more useful with time is at odds with both comme rcial reality 
and the original panel's finding that, over time, "the contribution of the NASA -funded research will 
diminish in relation to other, more recent or revolutionary technological developments that are 
attributable to other factors."1 The EU's wil lful ignorance is particularly disturbing given that the 
United States spent months of effort to provide more than 22,700 pages of documents that the EU 
insisted were critical to its case, in response to the Panel's request for information under DSU 
Article 13. These materials indicate the nature of the research conducted and the terms of the 
transactions, and disprove the EU's subsidization and adverse effects theories.  
3. The EU simply assumes that the accelerated development of technology for the 787 fou nd 
by the original panel remains relevant today and, therefore, that the 787 today continues to enjoy 
those advantages. But there is no basis to assume that Boeing would not have developed the 787 
over the intervening years, and the EU has not even tried t o support that obviously implausible 
story. As Boeing engineers set out in great detail in a report supplied with this submission, the 
technology advances identified by the original panel would have been developed by Boeing by 
2006, just as Airbus was able  to make similar technology advances for its own launch of the 
A350XWB by 2006 – that is, well before the end of the implementation period. And as the 787 with 
those technology advances would have been on the market, the EU has no plausible causation 
story in this proceeding  
4. The compliance Panel will have noticed the unprecedented length, complexity, and 
unfocused nature of the EU's first submission. Such an approach would appear to relate to the lack 
of any plausible and coherent theory of how subsidies  received by Boeing caused adverse effects. 
The EU does seem to recognize that it cannot make out a prima facie  case of non -compliance on 
the basis of the current facts, and so instead it ignores and distorts them, and seeks to rely on a 
different set of f acts by expanding the scope of the proceeding to issues unrelated to U.S. 
compliance. Indeed, the EU has gone to extraordinary lengths to resurrect claims and arguments 
                                               
1 US – Large Civil Aircraft (Panel) , para. 7.1758.  WT/DS353/RW/ Add.1  
 
- C-3 - 
 
  that it lost in the original proceeding and to bring new claims with regard to measures  that it could 
have challenged in 2005, but chose not to, or that are otherwise clearly outside the terms of 
reference of this Panel. Thus, for example, the EU:  
 seeks again to challenge alleged benefits derived by Boeing from having access to 
certain DoD  equipment and employees, and which the original panel found were 
excluded from the EU's original panel request;  
 revives claims against program elements under several DoD programs that already 
existed at the time of the EU panel request in the original panel proceedings, or that 
continue work under programs that existed at that time, but which the EU did not 
originally challenge;  
 seeks again to challenge DoD procurement contracts – even though that challenge 
was rejected by the original panel previousl y (and for which it then specifically asked 
the Appellate Body not to complete the analysis);  
 seeks to re -challenge certain Washington State and local measures for which there 
were no DSB recommendations and rulings;  
 raises entirely new claims with reg ard to environmental programs of the U.S. Federal 
Aviation Authority; and  
 raises entirely new claims with regard to economic development programs in the State 
of South Carolina that are not measures taken to comply, in particular that have no 
nexus to an y of the U.S. measures taken to comply or the DSB recommendations and 
rulings  
The United States understands the EU's need to grasp at any measure it can identify to try to build 
up the semblance of support for its missing economic / causation story. But, a s the United States 
indicated in its request for preliminary rulings, these claims and measures have no place in a 
compliance proceeding. The United States accordingly renews its request for a preliminary ruling 
that these measures are not within the Panel 's terms of reference.  
5. In closing this introduction, the United States notes that it has focused this submission on 
the key points raised in the EU first written submission. Silence with regard to any issue should be 
understood as silence, rather than a greement with a position we have not addressed.  
ALLEGED SUBSIDIES  
NASA Contracts and Space Act Agreements ("SAAs")  
6. During the original proceedings, the United States put forward evidence showing that NASA 
contracted private entities, including Boeing, t o conduct research to advance NASA's missions to 
achieve "{t}he expansion of human knowledge of the Earth and of phenomena in the atmosphere 
and space" and "{t}he improvement of the usefulness, performance, speed, safety, and efficiency 
of aeronautical and  space vehicles."2 The EU argued that, rather than achieving any public good, 
NASA research programs were exclusively to develop technology for Boeing to use in its aircraft. 
The original panel did not adopt either party's views. The original panel found t hat "it appears that 
a principal purpose of NASA's aeronautics R&D in general, and of the eight aeronautics 
programmes at issue, is to transfer technology to U.S. industry with a view to improving U.S. 
competitiveness vis -à-vis foreign competitors."3 On th e other hand, "the Panel accepts that NASA 
publicly disseminated the reports that summarized the results of the research conducted under the 
eight programmes at issue, and that this represents a situation in which Boeing has given up 
something of value in exchange for the funds and access to facilities, equipment and employees 
that it receives."4 
                                               
2 Space Act, § 102(d) (1) -(2) (Exhibit EU -252).  
3 US – Large Civil Aircraft (Panel) , para. 7.985.  
4 US – Large Civil Aircraft (Panel) , para. 7.1100.  WT/DS353/RW/ Add.1  
 
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  7. As outlined in the U.S. Compliance Notification and discussed in greater detail in the initial 
U.S. response to the Panel's Article 13 request for information, NASA overhauled its practices for 
conducting aeronautics research in the intervening period. This process, which was already under 
way at the end of the period covered by the panel's findings, led to the elimination or modification 
of many of the aspects o f the NASA programs that led to the original panel's findings. NASA 
lessened contractors' role in choosing research priorities and designing research programs. It 
framed research objectives to be broadly applicable to the community and thereby stimulate 
competition among suppliers, introduced neutral peer review of all proposals, and eliminated the 
fostering of industry competitiveness as an evaluation criterion. NASA eliminated LERD protection 
of the results of research, and committed to maximum disseminat ion of the results of its research.  
8. NASA also halved its average annual spending on aeronautics research as compared with 
the period covered by the original panel's findings. The real change in resource commitment is 
even more stark, as these figures d o not account for inflation.  
9. With regard particularly to the contracts that the panel and Appellate Body findings found to 
confer WTO -inconsistent subsidies, NASA modified the terms to bring them in line with a 
commercial benchmark.  
10. These actions b rought NASA into compliance with respect to the pre -2007 subsidies 
identified in the reports of the original panel and the Appellate Body. They also ensured that 
NASA's post -2006 contracts, cooperative agreements, and SAAs were consistent with WTO rules.  
11. The legal issue in this dispute, as framed by the EU, is whether the payments, facilities, 
equipment, and employees NASA provided to Boeing through the programs identified by the EU, in 
light of the compliance measures taken by the United States, are su bsidies that cause adverse 
effects in the period after September 23, 2012.5 To establish the existence of current subsidies in 
line with the EU argument would require: (1) an evaluation of the efficacy of the compliance 
measures taken by the United States with respect to the subsidies found to exist; (2) a thorough 
evaluation of the terms and conditions of any new subsidies alleged by the EU, again in light of 
U.S. compliance measures, and (3) correct application to those facts of the legal tests for the 
existence of a financial contribution, conferral of a benefit, and specificity. In spite of a lengthy 
submission, the EU has done none of these things.  
12. Although the United States referenced compliance measures taken by NASA in the U.S. 
Notification, expl ained how they ushered in a new approach to its funding of aeronautics research, 
and provided substantial information on them in the U.S. Article 13 response,6 the EU has, for the 
most part, not even attempted to discuss how they affected pre -2007 subsidie s, or the contracts, 
cooperative agreements, and SAAs between NASA and Boeing after 2006.  
13. The contracts and SAAs between NASA and Boeing in the FY2007 -FY2012 period are the 
putative financial contributions that the EU challenges. It is their terms, and  not generic 
descriptions of the NASA programs, that will determine whether or not they are subsidies. The 
evidence shows that these contracts researched topics of public usefulness, which NASA 
disseminated to the broadest extent possible to the public. Al though the United States expended 
considerable time and effort to make this information available in response to the Panel' s 
Article  13 request, which had been avidly sought by the EU, the EU largely ignored this 
information, choosing instead to rely on hi ghly generalized discussions of research topics in budget 
materials, which indicate nothing about the terms of the actual transactions. As these terms must 
form the basis of any analysis of financial contribution and benefit, the EU's failure to address 
them is fatal to its arguments. The EU also ignores that the magnitude of any financial contribution 
is vastly lower than alleged by the EU.  
14. On the question of financial contribution, the EU's failure to grapple with the facts leads it to 
incorrectly id entify post -2006 NASA contracts as "akin to a joint venture." In light of changes in 
NASA's practices, they are properly treated as purchases of services, which are not a financial 
contribution for purposes of Article 1.1(a) of the SCM Agreement. With resp ect to pre -2007 
contracts, the EU fails to realize the import of the Appellate Body's finding that pre -2007 contracts 
                                               
5 EU FWS,  para. 49.  
6 U.S. Compliance Notification, paras. 3 and 4; Response of the United States to the Panel's Request for 
Information Pursuant to Article 13 of the DSU , paras. 12 -16 (Feb. 28, 2013).  WT/DS353/RW/ Add.1  
 
- C-5 - 
 
  and SAAs are joint ventures, and accordingly applies benchmarks that do not account for all 
relevant terms of the transactions. Proper ben chmarks, including one endorsed by the EU, 
demonstrate that NASA funding under these instruments was no more favorable to Boeing than a 
commercial entity would have provided. (Because the EU incorrectly characterized the post -2006 
contracts, its benchmark analysis is completely inapplicable to those transactions.) Finally, when it 
comes to specificity, the EU incorrectly limits its analysis to NASA, when the Appellate Body has 
already found that the subsidy the EU alleges – the attribution to Boeing of more  intellectual 
property rights than it would receive under a commercial transaction – must be assessed on a 
broader level, and is not specific.  
DoD Contracts and Agreements  
15. It cannot be emphasized enough that the only findings of WTO inconsistency regar ding DoD 
were with respect to cooperative agreements, technology investment agreements ("TIAs"), and 
Other Transaction Agreements ("OTAs"; collectively "Agreements") funded through the original 23 
program elements, and that they formed the basis for the on ly recommendations and rulings of 
the DSB applicable to DoD. In light of the EU's failure, after seven years of trying in the original 
dispute, to obtain a recommendation with regard to other instruments or other program elements, 
there was no reason for t he United States to modify anything beyond the cooperative agreements, 
TIAs, and OTAs covered by the Appellate Body's findings.  
16. DoD's use of these instruments under the original 23 program elements with respect to 
Boeing has changed dramatically. Firs t of all, the number of cooperative agreements, TIAs, and 
OTAs between Boeing and DoD under the 23 original program elements has plummeted, from 50 
during the 1992 -2006 period to three from 2007 to 2012.7 DoD has also renegotiated the terms of 
the agreemen ts covered by the original proceedings, based on a commercial benchmark. Thus, 
these transactions no longer contain any subsidy element. In any event, their amount is too small 
to have any meaningful impact.  
17. However, the EU chose to expand its complian ce challenge far beyond the subsidies found to 
exist by the original panel and the Appellate Body. It did this in two ways, First, beyond the 
agreements (cooperative agreements, TIAs, and OTAs) funded through the 23 original program 
elements, the EU has as serted claims on procurement contracts. Second, the EU sought to add a 
series of new program elements, which it did not originally challenge, to the dispute.  
18. As the Panel is aware, the United States objected to this expansion of the dispute, and has 
sought a preliminary ruling that these additional claims are not properly within the Panel's terms of 
reference. As the Panel has not yet taken action on the U.S. preliminary ruling request, this first 
written submission addresses all of the EU claims.  
 U.S. measures taken to comply with respect to the agreements funded through the 23 
original program elements withdrew the subsidy found to exist, which consisted of 
terms for the allocation of patent rights more favorable than would have been 
available u nder a commercial transaction.  
 Procurement contracts funded through the 23 original program elements do not confer 
subsidies, and are not specific.  
 Instruments of all types funded through the new program elements are also not 
subsidies, and are also not specific.  
19. The legal issue in this dispute, as framed by the EU, is whether the payments and facilities 
DoD provided to Boeing through the programs identified by the EU, in light of the compliance 
measures taken by the United States, are subsidies t hat cause adverse effects in the period after 
September 23, 2012.8 To establish the existence of current subsidies with respect to agreements 
funded through the 23 original program elements, the EU's argument would require: (1) an 
evaluation of the efficac y of the compliance measures taken by the United States with respect to 
                                               
7 See DoD Agreements Listed in Annex B to the U.S. Compliance N otification  (Exhibit USA -107). If the 
new program elements challenged by the EU are included, the number of agreements  rises only slightly, to 
five. That is still vastly fewer than during the 1992 -2006 period.  
8 EU FWS, para. 49.  WT/DS353/RW/ Add.1  
 
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  the subsidies previously found to exist; (2) a thorough evaluation of terms and conditions of any 
new subsidies alleged by the EU, again in light of U.S. compliance measures, and (3) c orrect 
application to those facts of the legal tests for the existence of a financial contribution, conferral of 
a benefit, and specificity. In spite of a lengthy submission, the EU has done none of these things.  
20. DoD made important changes in its use o f agreements in its dealings with Boeing. In 
particular, DoD and Boeing entered into far fewer cooperative agreements, TIAs, and OTAs related 
to research after 2006 than before, both in general and under the 23 original program elements.  
21. The agreements  between DoD and Boeing in the FY2007 -FY2012 period are the putative 
financial contributions that the EU challenges, and it is the terms of the relevant instruments that 
will determine whether or not the transactions are subsidies. The evidence shows that these 
agreements produced research on topics of military use, and did not have the development of civil 
technology as an objective. Although the United States went to considerable time and effort to 
make this information available in response to the Panel' s Article 13 request, commenced following 
the suggestions of the EU, the EU largely ignored it, choosing instead to rely on highly generalized 
discussions of research topics in budget materials, which indicate nothing about the terms of the 
actual transact ions. As these terms must form the basis of any analysis of financial contribution 
and benefit, the EU's failure to address them is fatal to its arguments.  
22. The EU's methodology for calculating the value of any financial contribution is invalid, and 
produces an incorrectly inflated figure. The EU also fails to show the existence of a benefit, as it 
compares the terms of DoD instruments with the wrong benchmarks. Finally, when it comes to 
specificity, the EU incorrectly limits its analysis to DoD, when th e Appellate Body has already found 
that the subsidy the EU alleges – the attribution to Boeing of more intellectual property rights than 
it would receive under a commercial transaction – must be assessed on a broader level, and is not 
specific.  
Federal Avi ation Administration ("FAA") CLEEN Program  
23. The EU's claims regarding the Federal Aviation Administration's CLEEN program are based 
on unsubstantiated analogies to the NASA measures subject to the DSB's recommendations and 
rulings. They reflect a fundam ental misunderstanding of the nature of the CLEEN program, which 
is surprising, given that it appears similar to the EU's own Clean Sky Initiative. An accurate 
depiction of the CLEEN program makes clear that it is outside the terms of reference of this 
compliance panel and, in any event, is not a specific subsidy to Boeing. The EU appears to be 
looking for new measures to challenge, even if this comes at the expense of legitimate and non -
discriminatory environmental measures such as the FAA CLEEN program.  
State of Washington  
24. The EU contests seven measures enacted by the State of Washington or its localities.9 
However, only the EU's claim regarding a single measure – the Washington State B&O tax rate – is 
properly within the terms of reference of this comp liance proceeding. The United States complied 
with the DSB's recommendations and rulings in regard to this measure. The EU's remaining claims 
concern measures outside the terms of reference of this compliance proceeding: (i) measures 
challenged in the orig inal proceeding that were not found to cause adverse effects;10 or (ii) 
measures that are not measures taken to comply with the recommendations and rulings of the 
DSB.11 Moreover, and in any case, the magnitude of these alleged subsidies are all too small to  
cause adverse effects, when considered in the proper analytical framework.  
City of Wichita  
25. The City of Wichita is applying its Industrial Revenue Bond ("IRB") program in a manner 
consistent with the SCM Agreement. Boeing, moreover, no longer receives IRBs, and IRBs are no 
                                               
9 EU FWS, paras. 427 -541. 
10 This includes the EU claims regarding the Washington State B&O tax credits for preproduction 
development; Washington State B&O tax credits for property taxes; sales and use tax exemptions for 
computer hardware, software and peripherals; and the City of E verett B&O tax rate reduction.  
11 This includes the EU claims regarding Washington State B&O tax credits for leasehold excise taxes 
and the Washington State Joint Center for Aerospace Technology Innovation ("JCATI "). WT/DS353/RW/ Add.1  
 
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  longer causing any adverse effects. The United States has both withdrawn this subsidy and taken 
appropriate steps to remove its adverse effects.  
State of South Carolina  
26. Throughout the 1990s and up until today, the U.S. state of So uth Carolina has been 
providing a variety of programs to encourage and enable companies to invest in the state and, 
thus, to stimulate the economic development and well -being of the state at large. These programs 
are not targeted at any particular enterpri se or industry, and they are non -discriminatory in every 
sense of the word. Indeed, many companies from the EU have taken part in and made use of 
these programs. South Carolina's economic development measures, moreover, are not declared 
"measures to comply " and, in terms of their nature and effects, are different from any of the 
measures that are subject to the DSB's recommendations and rulings.  
27. Despite this, the EU has decided to challenge South Carolina's economic development 
measures and it argues t hat they are within the terms of reference of this compliance proceeding. 
The EU's arguments to this effect fail.  
28. Project Emerald is outside the terms of reference of this compliance proceeding, as it dates 
from 2004 and has no close nexus with the DS B's recommendations and rulings in the original 
panel proceeding. Moreover, Project Emerald and its constitutive parts are not subsidies within the 
meaning of Article 1 because they do not confer a benefit on Boeing.  
29. Project Gemini is outside the terms  of reference of the Panel, as it was not the subject of the 
DSB recommendations and rulings and is not a measure taken to comply, including because it has 
no close nexus with the measures that were the subject of the DSB recommendations and rulings. 
Project Gemini is also not a subsidy within the meaning of Article 1 of the SCM Agreement.  
30. The Article 2 specificity analysis is only relevant if and when it is determined that a measure 
is within the terms of reference and constitutes a subsidy. The measur es made available through 
Project Emerald and Project Gemini are generally available to industries meeting neutral criteria 
and, therefore, are not specific.  
Alleged Prohibited Subsidies  
31. In the EU's panel request, it claimed that every measure identifi ed was inconsistent with 
Articles 3.1(a), 3.1(b) and 3.2 of the SCM Agreement.12 The United States noted in its preliminary 
ruling request that it was implausible the EU was making all of the claims implied in its panel 
request. The U.S. skepticism was base d, in part, on the fact that the EU had taken the same 
approach in its original panel request, and yet made only two claims  of inconsistency under 
Article  3.1(a) and no claims under Article 3.1(b) in the original proceeding.13 
32. The EU's argument in its f irst written submission bears out the implausibility of its prohibited 
subsidy claims. However, unlike the EU's approach in the original proceeding, it followed through 
with an argument applicable to all challenged measures: that although they are not inco nsistent 
with Articles 3.1 and 3.2 of the SCM Agreement when considered individually, they become 
inconsistent when considered collectively.  
33. The EU's claims are precluded and, in any event, fail. Grouping measures does not bring the 
EU's claims within the terms of reference of this proceeding, nor does it remedy the deficiencies in 
the EU's substantive arguments.  
Adverse Effects  
34. The United States demonstrated in the preceding sections that it has withdrawn all subsidies 
of any significance that were  covered by the DSB's recommendations and rulings. To the extent 
that minor subsidies were not withdrawn, their magnitude is so small – particularly in the context 
of the LCA industry – that they cannot plausibly cause adverse effects to the EU's interests . The EU 
                                               
12 EU Panel Request, paras. 30 -31. 
13 Original EU Panel Request, p. 13; US – Large Civil Aircraft (Panel) , para. 3.1.  WT/DS353/RW/ Add.1  
 
- C-8 - 
 
  has thus failed to establish its case that "the United States grants and maintains subsidies to 
Boeing after the end of the implementation period that cause present adverse effects."14  
35. At its most basic level, EU's adverse effects case is cont radicted by developments in the 
market:  
 The EU asserts that U.S. R&D subsidies gave Boeing an enduring technology lead in 
the twin -aisle market. Yet Airbus was able to quickly catch up with the head -start that 
the original panel found Boeing enjoyed, an d today, according to Airbus,"{o}ur A350 
XWB has been out -selling the 787 by better than 2 - to-1 over the last five years."15 
 The EU asserts that the R&D subsidies, combined with a small magnitude of alleged 
tax and other subsidies, have enabled Boeing to  launch and price the 737 MAX as and 
when it did. Yet it was Airbus  that launched its re -engined single -aisle aircraft first 
(nine months before Boeing), and it is Airbus that, as it recently noted, retains a 60 
percent market share lead.16  
 The EU assert s that a small amount of alleged tax and other subsidies have benefitted 
the 737NG and led to price suppression and significant lost sales of the A320ceo. Yet 
these alleged subsidies are grossly insufficient to cause the alleged adverse effects.  
36. That t hese market developments look so different from what the EU asserts in its first 
written submission is no surprise: the EU's adverse effects case rests on shaky legal and factual 
ground that ignores the actual nature and magnitude of the alleged subsidies and disregards the 
original panel and Appellate Body findings.  
37. First, the EU fundamentally misconstrues the original panel finding with respect to 
"technology effects . The R&D subsidies were found to have accelerated the 2004 launch of the 
787, not to have enabled the development of technologies that Boeing would not have otherwise 
discovered. As a result, the EU fails to even ask when the 787 would have launched in the absence 
of the subsidies found in the original proceeding, a critical question for d etermining whether those 
subsidies continue to cause adverse effects. Based on their real -world experience, Boeing 
engineers indicate that, had Boeing not participated in the challenged NASA and DoD research, 
Boeing would have launched the 787 no later tha n 2006, with promised deliveries no later than 
2010. The EU's reliance on a false premise that the 787 would never have come to market absent 
subsidies results in a failure to establish a genuine and substantial causal link between the alleged 
subsidies an d the corresponding alleged adverse effects.  
38. Second, the EU ignores the important changes to NASA and DoD R&D programs since 2006 
– such that even if they could be considered to confer a subsidy (which the United States has 
shown is not the case), they  could not be expected to have the same kind of "technology effects" 
that the panel found to have arisen from the R&D measures in the original proceeding.  NASA and 
DoD have both dramatically reduced the number and value of the research transactions challe nged 
in the original proceeding – NASA by more than half, and DoD by even more. And with respect to 
their terms and nature, NASA has, among other things, increased access to the results of its 
research and focused increasingly on foundational research,  thus not only removing any subsidy 
but also dramatically altering any possible effects that the measures could possibly have.  
39. Third, with respect to "price effects"  – the other prong of the EU's adverse effects case – the 
EU similarly misconstrues the ori ginal findings and ignores the small magnitude of the subsidies 
that could have any conceivable relation to pricing. The EU ignores the original panel's finding that 
R&D subsidies acting through a technology -based causal mechanism cannot also act through a  
price-based causal mechanism. The EU fails to assess with any rigor the magnitude of any 
unwithdrawn subsidies. The EU ignores the Appellate Body finding that the effects of individual 
smaller subsidies that act through distinct causal mechanisms cannot b e cumulated when no 
individual subsidy or aggregated group of subsidies has a substantial causal relationship with the 
                                               
14 EU FWS, para 790.  
15 Airbus Books Almost US$70 Billion at Paris Air Show 2013 , Press Release, Airbus (June 20, 2013) 
(Exhibit USA -282).  
16 Airbus Books Almost US$70 Billion at Pari s Air Show 2013 , Press Release, Airbus (June 20, 2013) 
(Exhibit USA -282).  WT/DS353/RW/ Add.1  
 
- C-9 - 
 
  alleged adverse effects. And the EU fails to demonstrate that non -recurring subsidies untied to the 
production or development of aircraft  affect Boeing's pricing. The EU thus fails to establish a 
genuine and substantial link between the alleged subsidies acting through a price effects causal 
mechanism and any adverse effects.  
40. The United States demonstrates that these critical errors, co upled with a failure to account 
for numerous non -attribution factors, lead to the EU's erroneous claims of significant price 
suppression, significant lost sales, and displacement, impedance, and/or threat thereof. 
Accordingly, the EU has failed to establis h its claims that unwithdrawn subsidies continue to cause 
adverse effects after the end of the compliance period.  
CONCLUSION  
41. For the foregoing reasons, the United States respectfully requests the Panel to grant the 
preliminary rulings requested by the  United States, and otherwise find that the EU has failed to 
make a prima facie case of non -compliance with the recommendations and rulings of the DSB in 
this matter.  WT/DS353/RW/ Add.1  
 
- C-10 - 
 
  ANNEX C -2 
EXECUTIVE SUMMARY OF  THE SECOND  WRITTEN SUBMISSION  
OF THE UNITED STATES  
National Aeronautics and Space Administration ( "NASA ") Research Programs  
1. NASA 's Aeronautics Research Mission Directorate ( "ARMD ") took a number of steps in 2006 
that significantly changed its research practices. The United States described these in its first  
written submission – revised contracting practices that lessened contractors ' role in shaping 
objectives, peer review of research proposals, elimination of industry competitiveness as an 
objective, and the addition of dissemination of results as a source selection criterion, among 
others. NASA 's budget for aeronautics research also continued to fall during the FY2007 -FY2012 
period, coming to a rest at its lowest levels in 20 years. These changes resulted in a dramatic 
reduction in research contracting, inc luding with Boeing.  
2. In addition, NASA modified the terms of its research contracts with Boeing for the conduct of 
research relevant to large civil aircraft to bring them in line with the potential benchmarks 
discussed by the Appellate Body. It took thi s change not only with respect to the pre -2007 
contracts explicitly covered by the recommendations and rulings of the DSB, but also with respect 
to contracts awarded under the modified post -2006 aeronautics research contracting practices.  
3. The EU does no t dispute that funding under the challenged programs was drastically lower in 
the 2007 -2013 period. Nonetheless, it asks the Panel to find that the value of NASA payments and 
provision of facilities, equipment, and employees to Boeing more than doubled . The EU's figures 
are not credible. The United States used the methodology endorsed by the original panel to 
identify contracts funded by NASA 's four aeronautics research centers and then, in line with the 
Panel 's request, provided those funded by the program s challenged by the EU. Thus, the 
United  States has responded to the Panel 's concerns, while the EU still champi ons its discredited 
methodology , which the original panel rejected. The EU does dispute the changes to NASA 's 
research contracting practices, be littling the overhaul in NASA 's contracting practices in 2006 as "a 
disparate set of actions brought together only for the purposes of this dispute. " However, the as 
the U.S. first written submission showed, NASA has shifted away from technology demonstrat ion 
like the High Speed Research Program and toward more foundational research.  
4. In light of these changes, NASA has withdrawn the subsidies determined to exist, both with 
regard to the pre -2007 contracts covered by the recommendations and rulings of the  DSB and 
with regard to subsequent contracts and agreements. Specifically, the Appellate Body findings in 
US – Large Civil Aircraft  identified a small gap between government terms and the market terms 
for comparable transactions, consisting mainly of the g overnment 's failure to obtain certain 
intellectual property rights for commercialization outside its established government sphere of 
activities. The NASA Licensing Agreement eliminated that gap, withdrawing the benefit that led to 
the finding of subsidiza tion. 
5. The United States has shown that post -2006 contracts are purchases of services because 
they involve primarily monetary contributions from the government, and the performance of 
research services by Boeing. These are not a form of financial contrib ution. In any event, 
assuming arguendo  that they were a financial contribution, these transactions do not confer a 
benefit, as their terms are consistent with comparable commercial transactions. Furthermore, 
those terms are consistent with those offered by  all U.S. government agencies on research and 
development contracting, so if there were some element of benefit, any resulting subsidy would 
not be specific. The same holds true for NASA 's SAAs with Boeing.  
Department of Defense ( "DoD") Assistance Instrume nts 
6. The U.S. first written submission demonstrated that the EU had failed to establish any failure 
on the part of the United States to comply with the DSB 's recommendations and rulings regarding 
DoD. For assistance instruments funded through the origina l 23 program elements the difference 
between DoD 's terms and market benchmarks was limited to DoD 's right to use any resulting WT/DS353/RW/ Add.1  
 
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  technologies outside of its established sphere of operation. The DoD Licensing Agreement 
eliminated that difference.  
7. For thes e instruments, the primary disagreements between the parties are over the value of 
the post -2006 assistance instruments, the existence of a benefit, and specificity. The parties do 
not otherwise dispute the basic facts: the assistance instruments awarded t o Boeing are "akin to a 
joint venture, " they are financial contributions, and the pre -2006 agreements provide for defense 
technologies (which is the basis for DoD 's funding) with potential civil applications. The parties also 
agree that DoD assistance inst ruments operate basically the same today as they did in the period 
covered by the original panel and Appellate Body findings.  
DoD Contracts Funded Through the "General Research " Program Elements  
8. The original panel found that DoD procurement contracts a nd assistance instruments are 
fundamentally different, and that only the latter conferred a subsidy. Nevertheless, the EU 
attempts to resuscitate its challenge to DoD procurement contracts by arguing that DoD 
procurement contracts and assistance instrument s work the same way. This is another example of 
the EU 's effort to turn this proceeding into a referendum on the recommendations and rulings of 
the DSB, rather than whether the United States complied with its WTO obligations.  
9. The EU 's second written su bmission indicates many important areas of agreement between 
the United States and the EU with respect to contracts funded through the "general research " 
program elements. The EU does not dispute that all of these transactions had military objectives. 
It also does not dispute that, outside of the DUS&T and ManTech programs, DoD sets its research 
objectives based exclusively on the potential for providing future technology options for military 
needs, and evaluates for -profit firms ' proposals to perform resea rch exclusively on the extent to 
which they meet those military objectives. These facts confirm that the resulting transactions were 
not joint ventures, designed to produce technology useful for both DoD 's military objectives and 
Boeing 's civil use. The EU  second written submission, in an effort to create the impression that 
military research had massive civil uses, highlights every reference to civil application under these 
contracts. However, the rarity of these references only serves to demonstrate furth er the 
insignificance of potential civil uses to these transactions.  
10. The EU asks the Panel to ignore these critical aspects of the transaction and assume that 
operation of DoD contracts is indistinguishable from the operation of assistance instruments the 
Appellate Body found to be actionable subsidies. In fact, the original panel made factual findings, 
which the EU did not appeal, that "there are significant, substantive differences between DOD 's 
R&D procurement contracts and DOD 's R&D assistance instr uments with Boeing. " The EU explicitly 
asked the Appellate Body not to make any finding with regard to the legal consequences of these 
substantive differences. Therefore, the question of how to characterize these transactions has not 
been decided already. In fact, the evidence, as supplemented by the EU second written 
submission, establishes that, unlike the pre -2007 NASA contracts and DoD assistance instruments, 
these transactions were purchases of services. The EU has provided no convincing rebuttal to th is 
conclusion, so it has failed to establish that DoD contracts funded through the "general research " 
program elements were subsidies.  
DoD Contracts Funded Through the "Military Aircraft " Program Elements  
11. The original panel found that DoD procurement c ontracts and assistance instruments are 
fundamentally different, and that only the latter conferred a subsidy. The EU attempts to 
resuscitate its challenge to DoD procurement contracts by arguing that DoD procurement contracts 
and assistance instruments wo rk the same way. Just as with the other contracts, this is an 
example of the EU 's effort to turn this proceeding into a referendum on the recommendations and 
rulings of the DSB, rather than the compliance measures taken by the United States.  
12. The Parti es agree on most of the critical facts regarding these transactions. The EU does not 
dispute that the "military aircraft " program elements funded purchases of new weapons systems 
and upgrades to existing ones. The EU also does not dispute the U.S. descript ions of the relevant 
transactions, or that these contracts differ from the NASA contracts and contracts funded through 
the "general research " program elements. Indeed, the difference between "general research " and WT/DS353/RW/ Add.1  
 
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  "military aircraft " program elements is th e primary organizational division among its DoD -related 
claims.  
13. The primary difference between the parties regards the correct legal implications of these 
facts. The United States has shown that these distinctive characteristics of contracts under the 
"military aircraft " program elements warrant the conclusion that contracts for the purchase of new 
weapons systems are a different form of financial contribution, namely, a purchase of goods, and 
that upgrade contracts are purchases of goods or services, d epending on the nature of the 
upgrade. In spite of recognizing the differences between the "general research " and "military 
aircraft " program elements, the EU argues that contracts under the different types of program 
elements should be treated as identica l to each other, and identical to assistance instruments, for 
purposes of the subsidy analysis. The EU provides no valid support for this one -size-fits-all 
approach.  
Federal Aviation Administration ( "FAA") CLEEN Program  
14. The EU has failed to establish t hat the CLEEN program confers a specific subsidy to Boeing. 
The EU proceeds (erroneously) as if the original panel 's findings against NASA contracts and DoD 
assistance instruments creates a presumption of WTO -inconsistency with respect to the FAA, and 
the EU ignores important differences among them, including Boeing 's higher contribution level 
under the CLEEN OTA. The EU also fails to establish that FAA provided any facilities, equipment or 
employees to Boeing pursuant to the CLEEN OTA, and the new "evidenc e" the EU cites in its 
second written submission is irrelevant. The EU has also failed to demonstrate that the CLEEN 
program confers a benefit, as the EU does not identify the appropriate benchmark and assess 
whether the CLEEN OTA was more favorable to Boe ing than the benchmark. In particular, the EU 
did not evaluate whether the "equilibrium " of funding and resources each party contributes "is 
more favorable to the commissioning party " in a commercial joint venture than in the CLEEN OTA. 
Finally, the allege d subsidy is not specific because the IP allocation terms, the alleged subsidy, are 
common to all research contracts with U.S. government agencies.  
FSC/ETI  
15. Boeing has not used Foreign Sales Corporation and Extraterritorial Income ( "FSC/ETI ") tax 
benefi ts after 2006. The EU 's simplistic assumption that the mere availability of a tax break is 
prima facie  evidence of its receipt is inconsistent with the original panel 's reasoning, the EU 's own 
evidence in the original proceeding, and the statement of Boein g's Vice President of tax. The EU 
provides no evidence that Boeing has in fact used FSC/ETI and the EU 's second written submission 
attempts to obscure the fact that the EU has failed to establish a prima facie  case. 
Washington Measures  
16. The EU 's claim c oncerning the Washington B&O tax rate is the only claim regarding 
Washington that is properly within the Panel 's terms of reference. The United States has complied 
with the DSB 's recommendations and rulings with respect to this measure because Washington 
applies the B&O tax rate such that the magnitude of any remaining subsidy is too small to cause 
adverse effects. Also, the EU 's estimates of the value of the B&O tax rate reduction to Boeing, 
which are significantly higher than the Washington Department of Revenue ( "DOR") calculations 
based Boeing 's actual tax information, are fundamentally flawed. The EU 's estimates are based on 
the unsupported (and unrealistic) assumption that Boeing 's revenue will increase drastically from 
2012 to 2013, and then remain co nstant from 2013 to 2031.  
17. The EU 's claims regarding the Washington B&O tax credits for preproduction development 
and for property taxes, Washington State sales and use tax exemptions for computer hardware, 
software and peripherals, and the City of Ever ett B&O tax rate are not properly within the Panel 's 
terms of reference. Additionally, the EU 's purported concerns regarding the reliability of the DOR 
calculations and the City of Everett data, which are based on Boeing 's actual tax information, are 
disingenuous and misplaced.  
18. The EU 's claims regarding the Washington State B&O tax credit for leasehold excise taxes 
and the Washington State Joint Center for Aerospace Technology Innovation ( "JCATI ") are not 
properly within the Panel 's terms of reference. In any event, the value of the leasehold excise tax WT/DS353/RW/ Add.1  
 
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  credit is zero because Boeing does not claim it. With regard to the JCATI, the EU appears to 
recognize in its second written submission that its initial assertion that Boeing received grant 
money was inco rrect. However, the EU fails to conduct an adjusted benefit analysis to assess 
whether a subsidy has been conferred and, instead, maintains that Boeing received a benefit in the 
amount of non -existent grants to Boeing.  
Kansas IRBs  
19. The United States has  both withdrawn the subsidy and taken appropriate steps to remove its 
adverse effects. The City of Wichita has not provided any Industrial Revenue Bonds ( "IRBs") to 
Boeing since 2007 and there is no longer any basis to consider the amount of IRBs issued to  
Boeing to be disproportionately large and therefore de facto  specific under Article 2.1(c). The EU 's 
criticisms that the specificity analysis should not look to the amount of IRBs issued, or consider the 
absence of IRBs issued after 2007 (as opposed to ov er the entire life of the program), are 
misplaced. The original panel and Appellate Body 's consideration of specificity was based on the 
amount of IRBs issued. Moreover, in light of the significant change in the structure of the Wichita 
economy, it is appr opriate to consider the issuance of IRBs over a more recent period.  
South Carolina Measures  
20. The EU 's claims regarding South Carolina are not properly within the terms of reference of 
this compliance proceeding because those measures are not measures ta ken to comply.  
21. The EU fails to establish that the Project Site Lease and the state bond -funded provision of 
facilities and infrastructure confer a specific subsidy to Boeing. In regard to the Project Site Lease, 
there is no financial contribution becau se Vought, not South Carolina, provided Boeing the right to 
use the Project Site through 2041. The EU also fails to establish that Boeing 's remuneration for the 
Project Site Lease, even if it were a financial contribution, is inadequate. Similarly, in rega rd to the 
bond-funded provision of facilities and infrastructure for Project Emerald, there is no financial 
contribution because Vought, not South Carolina, provided Boeing the right to use them. There is 
no benefit with respect to Project Gemini facilitie s and infrastructure because Boeing adequately 
remunerated South Carolina through significant investment in the Project Site. In addition, the EU 
fails to demonstrate that the Project Site Lease or the provision of facilities and infrastructure is 
specific  given that South Carolina does not limit access to the alleged subsidies, either in law or 
fact. 
22. The EU also fails to demonstrate that the Emerald and Boeing fee agreements confer specific 
subsidies to Boeing. Neither involves revenue foregone that is  otherwise due because Boeing 
receives the same tax treatment as similarly situated taxpayers. Any other industrial taxpayer with 
a sufficiently high level of investment and employment would qualify for the same assessment rate 
as Boeing. In addition, FILO T agreements are not specific because the authorizing legislation does 
not explicitly limit access to FILOT agreements to certain enterprises; there are objective criteria 
for qualification; and FILOT agreements are routinely made available to companies me eting the 
statutory criteria.  
23. The EU fails to demonstrate that the Boeing apportionment agreement confers a specific 
subsidy to Boeing. The EU 's assertion that the agreement constitutes a financial contribution 
because it alters the treatment of "sales in this state " for Boeing is premised on a 
misunderstanding of South Carolina law. South Carolina law provides that "sales in this state " only 
includes goods, merchandise or property that is received by a purchaser in South Carolina "after 
all transportat ion is completed. " The EU also fails to demonstrate that apportionment agreements 
are specific, in light of the fact that such agreements are not explicitly limited by the granting 
authority or relevant legislation, and are readily available as part of Sou th Carolina 's effort to 
encourage business activity in the state.  
24. The EU has also failed to establish a prima facie  case regarding the other South Carolina 
measures, including the LCF property tax exemption, the sales and use tax exemptions, readySC 
workforce training, and MCIP jobs tax credits.  WT/DS353/RW/ Add.1  
 
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  25. The EU 's claims regarding "Phase II " are not properly within this compliance Panel 's terms of 
reference, and the EU fails to put forward sufficient evidence to establish a prima facie  case for 
any of its cla ims. Indeed, the EU fails to establish that the challenged measures even exist.  
Alleged Prohibited Subsidies and Claims Under Article III of GATT 1994  
26. The EU 's prohibited subsidy claims are not properly within the Panel 's terms of reference 
and, in any  event, the EU fails to make a prima facie  showing of prohibited export contingency or 
import substitution under Articles 3.1 and 3.2 of the SCM Agreement. The EU fails to specify with 
any particularity how the alleged subsidies are in fact contingent on e xport performance or the use 
of domestic over imported goods. The EU relies on a collection of unremarkable statements and 
fails to explain the alleged connection between the statements and the factual or legal conclusions 
it asks the Panel to draw. The EU 's second written submission, which repeats verbatim the entirety 
of the argument set out in the EU 's first written submission, fails to remedy the deficiencies in the 
EU claims. The EU 's bald assertions are insufficient to demonstrate that the granting of  an alleged 
subsidy at issue in this dispute is contingent on exports or the use of domestic over imported 
goods.  
27. In its first and second written submission, the EU makes cursory arguments that all of the 
measures challenged elsewhere in each submissio n are also inconsistent with Article III:4 of the 
GATT 1994. It is impossible to discern the legal or factual basis for the EU 's claim because it 
consists entirely of a cross -reference to the EU 's factual and leg al arguments concerning 
Article  3.1(b) of th e SCM Agreement, which applies an entirely different legal standard.  
28. The United States demonstrated in its first written submission that the EU failed to meet its 
burden, under Article 7.8 of the SCM Agreement, of proving that the United States did no t take 
appropriate steps to remove the adverse effects of any unwithdrawn subsidies. Where the original 
panel had found $2.6 billion in financial contributions from NASA in the 1989 -2006 period, and 
drawn linkages to technologies used on the 787, the post -2007 period saw a small fraction of that 
in NASA financial contributions, and the EU points to no meaningful linkages between recent 
research and technology on Boeing 's large civil aircraft. Thus, even by the EU 's account , the 
situation that led to the fin ding that NASA and DoD subsidies caused adverse effects by 
accelerating the launch of the technologically sophisticated 787 no longer exists today. Where the 
Appellate Body found that the tail end of the FSC/ETI program – especially problematic as both an 
export subsidy and a tied tax subsidy – together with a few other tied tax subsidies, caused a 
limited number of Airbus lost sales to the 737, FSC has been withdrawn and Boeing no longer uses 
that benefit. The EU has no credible explanation for why the rem aining measures, along with any 
new measures, are large enough and harmful enough to cause adverse effects.  
29. The EU 's response to this critique consists primarily of repeating and building upon the 
errors from the first written submission. It continues to disregard the changes in the subsidies 
found to exist in the original proceeding – the decrease in the expenditures and change in the 
nature of NASA research programs, DoD 's decreasing use of its only funding instruments found to 
confer subsidies, and t he end to Boeing 's use of FSC/ETI benefits. It continues to advocate the 
implausible theory that it would take Boeing engineers more than a decade to achieve what Airbus 
engineers achieved in two years – the launch of a sophisticated, primarily composite a ircraft. It 
continues to insist that measures that are not export contingent, and for the most part not tied to 
sales, will have the same effects as FSC/ETI. And it continues to do all of this with a lack of clarity 
as to what subsidies have what effects.  
Adverse Effects  
30. The EU has not indicated which subsidies it alleges to cause technology effects and which 
subsidies it alleges to cause price effects. In its second written submission, the EU has clarified 
that it is alleging two distinct, non -overlap ping sets of R&D subsidies: one set of R&D subsidies 
that cause technology effects and another set of R&D subsidies that cause price effects. However, 
the EU refuses to clearly identify which R&D subsidies it alleges are in each set. At this stage, the 
EU's refusal to clearly communicate what is being argued puts the United States in the unfair 
position of not knowing precisely what it is being asked to defend against and constitutes a failure 
to carry the EU 's burden of proof.  WT/DS353/RW/ Add.1  
 
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  31. The United States has obj ected to the unruly and sprawling case the EU has inappropriately 
tried to squeeze into this compliance proceeding, including by attempting to re -litigate issues that 
were already resolved in the original proceeding. U.S. objections to the EU 's unauthorize d and 
massive expansion of claims in this compliance proceedings is not an issue of the proper reference 
period, and no attempts to cast it differently can justify the EU 's attempts to re -litigate previously 
resolved issues or raise claims it could have pu rsued in the original proceeding but chose not to.  
32. It is the EU – not the United States – that is trying to escape from the "previously 
established finding " with respect to U.S. subsidies that result in Boeing charging lower prices ( i.e., 
through the EU's price effects causal mechanism). Starting from the previously established finding, 
the United States has not atomized or segmented anything. The United States excluded FSC/ETI – 
not because it analyzed its effects separately – but because it unquestio nably has been withdrawn. 
Having excluded FSC/ETI on this basis – and again, this was the only subsidy aggregated with the 
Washington B&O tax rate reduction in the Appellate Body 's analysis of the 100 -200 seat market – 
the United States assessed the Washin gton B&O tax rate reductio n on its own. And as the 
United  States has shown, based on the EU 's theory of how these subsidies cause effects, the EU 
has not substantiated and cannot demonstrate that the Washington B&O tax rate reduction alone 
could be a genui ne and substantial cause of significant lost sales (or any other form of serious 
prejudice).  
33. In the first written submission, the United States demonstrated numerous errors in the EU 's 
aggregation arguments, which fail to satisfy the EU 's burden based on the standard it 
acknowledges. Not only has the EU failed to rebut those demonstrations, its clarification of its R&D 
subsidy allegations has only compounded the errors.  
34. The EU gives no further explanation in its second written submission of how the  FAA 
subsidies share a common design, structure, and operation with the NASA and DoD subsidies, 
choosing instead to rely on the brief discussion in its first written submission, which itself cross -
referenced the EU 's more general discussion of the alleged subsidies. The United States has 
already demonstrated that many of the EU 's general discussion of the FAA CLEEN program 
contains numerous inaccuracies. And in any event, the EU 's aggregation of all FAA, NASA, and 
DoD R&D subsidies unquestionably fails as a  result of the EU 's unelaborated distinction between 
alleged R&D subsidies that have technology effects and those that have price effects.  
35. The EU has confirmed that the aggregated tied tax subsidies group is different for each 
market, meaning the magn itude for each group is different. In attempting to establish its claims, it 
is incumbent upon the EU to engage with the particulars in each market rather than generically 
refer to the U.S. subsidies as if the group is static. With respect to the miscellan eous subsidies, the 
U.S. position is that it is insufficient to merely allege that the subsidies leave Boeing with more 
money that it would have in the absence of the subsidies, which is significantly different than 
requiring the subsidies to be identical.  
36. Moreover, the EU is vague about whether it is actually seeking some analysis different from 
the cumulation analysis previously employed by the Appellate Body. To the extent the EU is 
seeking a novel form of collective assessment of subsidies, it bears  the burden of explaining the 
mechanics of its proposal, when this form of collective assessment is appropriate, and why it is 
appropriate in this instance. The EU has done none of this. What is clear, however, is that under 
the cumulation analysis previou sly applied by the Appellate Body, including in the original 
proceeding of this dispute, cumulation is not appropriate where no subsidy or aggregated group of 
subsidies can be shown to have a genuine and substantial causal relationship with relevant market  
phenomena. Indeed, it is the EU 's position that is contradicted by explicit Appellate Body guidance.  
37. The United States in no way contests the Appellate Body 's finding that different causal 
mechanisms does not preclude a panel from even assessing whet her cumulation  is appropriate. 
The United States notes that subsidies acting through different causal mechanisms cannot be 
aggregated  – that is, they cannot be treated as a single subsidy. The United States also points out 
that, while different causal mech anisms do not act as a bar to any cumulation analysis, the 
complaining party still must show that the effects of two subsidies (or aggregated groups of 
subsidies) are appropriately ( i.e., should be) cumulated. The EU 's misrepresentation of the U.S. 
argumen t leads it to incorrectly conclude that the United States is asking the Panel "to commit the 
same legal error as the original panel. " WT/DS353/RW/ Add.1  
 
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  38. In its first written submission, the United States demonstrated that the U.S. aeronautics 
R&D measures properly within  the terms of reference of this Panel do not cause present adverse 
effects through a technology effects causal mechanism. The U.S. demonstration encompasses both 
the compliance steps that changed the nature and magnitude of U.S. aeronautics R&D programs 
related to LCA, and the expiration of the technology effects found in the original proceeding.  
39. While the EU disagrees with the United States on many points, its responses confirm that 
the core technology effects issue before the Panel is when the 787 wo uld have been available 
absent subsidies. The EU agrees that the technology effects of the NASA and DoD R&D subsidies to 
the 787 have a finite duration. The EU either agrees or does not contest that, absent those 
subsidies, Boeing would have launched the 7 87 at some point after 2004. And the EU agrees that 
the proper way to determine when that launch would occur is through a counterfactual timing 
analysis focused on when Boeing could have made the 787 available.  
40. Having narrowed the issues in this way, t he parties do disagree as to the proper framing of 
the counterfactual question under such an analysis, the R&D programs subject to the analysis, and 
the ultimate conclusion. First, the U.S. counterfactual question isolates the effect of the relevant 
subsid ies by delaying the 787 launch by the amount of time it would take Boeing engineers, 
absent any knowledge and experience they gained from participating in the WTO -inconsistent 
NASA and DoD research contracts and agreements to reach the point of launching t he 787. In 
contrast, the EU counterfactual question would extend this delay by adding more time for (i) work 
performed under DoD procurement contracts that have not been found to confer specific subsidies, 
plus (ii) R&D actually performed by Boeing and its  suppliers even though this would double -count 
the time taken for such work. Second, the U.S. counterfactual analysis estimated two years of 
additional, counterfactual R&D time by looking to Boeing 's real -world experience performing early -
stage R&D on the 787 program, which involved technological challenges comparable to those 
addressed in the NASA and DoD programs. In contrast, the EU, without disputing that the U.S. 
benchmarks involve early -stage R&D of comparable difficulty, proposes ten -plus years of ad ditional 
time that is based on a generic rule -of-thumb for all phases of concept -to-commercial technology 
development. Third, the U.S. two -year estimate, when added to Boeing 's actual pre -launch R&D 
time for the 787, is roughly comparable to the one -to-two-year pre -launch development time for 
Airbus 's A350 XWB. In contrast, the EU 's 10-plus-year figure implies that it would have taken 
Boeing five to ten times longer to launch the 787 than it took Airbus to launch the A350 XWB 
without participating in the NA SA and DoD R&D programs.  
41. The United States elaborates on these and related issues, demonstrating that the U.S. 
approach is a reasonable, evidence -based way to answer the 787 counterfactual timing question, 
while the EU 's is not. Having failed to overco me the U.S. demonstration that the 787 would have 
been launched in 2006, there is very little left to the EU 's technology effects arguments. The EU 
either accepts or does not dispute that a 787 launch in 2006 would have allowed Boeing to develop 
the 737 MA X and 777X at the time and in the manner it has – even if all of the EU 's technology 
spillover arguments were accepted. This leaves no technology effects allegations of any 
consequence.  
42. With respect to the alleged post -2007 R&D subsidies, the EU conce des that at least some do 
not cause technology effects, implying that the nature of U.S. R&D contracts and agreements has 
changed. Meanwhile, its specific technology effects arguments for alleged post -2007 R&D subsidies 
associated with the 787, 777X, are 7 37 MAX boil down to an FAA CLEEN program that is outside 
the Panel 's terms of reference. In any event, the CLEEN program did not have any technology 
effects. Finally, the EU largely does not dispute that the United States reduced substantially the 
amount o f funding and resources provided to Boeing under the challenged R&D programs. 
Assuming, arguendo , that the Panel were to find that any existing U.S. R&D programs conferred 
subsidies to LCA, such subsidies under those programs would be a fraction of the alr eady much -
reduced program values.   
43. With respect to price effects, the DSB recommendations and rulings included a finding that 
an aggregated group of FSC/ETI and the Washington B&O tax rate reduction, when cumulated with 
the effects of the Wichita IRB 's, constituted subsidies to the 737 that were causing price effects 
leading to serious prejudice in the form of significant lost sales in the 100 -200 seat market. The 
United States has achieved compliance with respect to these measures, the only ones found  to 
cause serious prejudice through a price causal mechanism. The withdrawal of FSC/ETI alone WT/DS353/RW/ Add.1  
 
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  ensures that U.S. subsidies are no longer causing adverse effects through a price causal 
mechanism.  
44. Unwilling to accept U.S. compliance as a positive result, the EU puts forward a multitude of 
arguments, including some that appear to be deliberately opaque. This effort includes a contention 
that some unspecified group of R&D subsidies cause price effects now instead of technology 
effects. It includes a resuscit ated argument that the price effects subsidies should be cumulated 
with technology effects R&D subsidies. It includes the re -litigation of claims and arguments that 
were already rejected in the original proceeding. It includes new claims against measures t hat 
existed at the time of the original panel request but were not challenged in the original proceeding. 
And it includes claims against measures that, even if they were subsidies, have no close nexus 
with the U.S. measures taken to comply. In its second w ritten submission, the EU doubles down 
on its pursuit of this misguided and unauthorized expansion of its price effects case. The particular 
flaws of the EU 's approach are examined in the four sub -sections below.  
45. First, the EU has failed to cure the e rrors identified by the United States in the EU 's price 
causal mechanism arguments, and in some cases, it has compounded earlier errors. The vague 
and cryptic nature of the EU 's arguments, particularly those that relate to R&D subsidies, unfairly 
place the  Panel and the United States at a significant disadvantage in addressing claims of non -
compliance. Second , consistent with this pattern, the EU still does not engage in a meaningful 
analysis of the magnitude of subsidies alleged to affect each relevant mar ket, which constitutes a 
failure to meet its burden as the complaining party. Third, as a result of numerous errors, the EU 
has failed to establish that miscellaneous subsidies not subject to the DSB 's recommendations and 
rulings are capable of and do caus e Boeing to lower prices and thereby cause serious prejudice. 
Fourth , and again as a result of numerous errors, the EU has failed to establish that R&D subsidies 
are capable of and do cause Boeing to lower prices and thereby cause serious prejudice.  
46. The United States has also shown that the EU still has failed to demonstrate that alleged 
subsidies to the 787 and/or the 777X cause adverse effects in the form of significant price 
suppression, significant lost sales, displacement, impedance, or threat ther eof with respect to the 
A350 XWB. The EU also still has failed to demonstrate that alleged subsidies to the 737 MAX cause 
adverse effects in the form of significant price suppression, significant lost sales, impedance, or 
threat of impedance with respect t o the A320neo. Finally, the EU has still failed to demonstrate 
that alleged subsidies to the 737NG cause adverse effects through significant price suppression, 
significant lost Sales, displacement, impedance, or threat thereof with respect to the A320ceo.  
 WT/DS353/RW/ Add.1  
 
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  ANNEX C -3 
EXECUTIVE SUMMARY OF  THE STATEMENT OF  
THE UNITED STATES AT  THE PANEL MEETING  
I. RESEARCH AND DEVELOPMENT MEASURES  
A. Financial Contribution  
1. The Appellate Body in US – Large Civil Aircraft  emphasized that the proper analysis starts by 
looking at all of the characteristics of the transactions in question, identifying which are relevant, 
and then examining whether the transactions fall into any of the categories of financial 
contribution. In that dispute, and in Canada – Renewable Energy , the Appellate Bo dy found that 
Article  1.1(a)(1) does not "preclude " the possibility of a transaction being more than one of the 
types of financial contribution. A transaction does not fall into mult iple categories under 
Article  1.1(a)(1) because a single set o f facts is susceptible to competing interpretations. Rather, 
multiple categorization becomes possible only when, after the initial conclusion that the 
transaction fits in a category, there are additional significant characteristics that establish the 
existence of an additional  (rather than an alternative) categorization.  
2. The EU views paragraph 611 of US – Large Civil Aircraft as setting up a test under which a 
measure is "akin to a species of joint venture " and a "direct transfer of funds " if it possesse s all of 
those factors, without regard to any other consideration. But it is instead a list the "principal 
characteristics " of the measures before the Appellate Body, as derived from the facts laid out in 
paragraphs 593 through 610 of the report. A differe nt set of facts could accordingly result in a 
different set of "principal characteristics. "  
3. The first key point is that the various financial contributions alleged by the EU are, for the 
most part, not separate measures. Rather, the payments, any provi sions of facilities, equipment, 
or employees, and any attribution of intellectual property rights are typically part of a single 
transaction. The second key point is that each of the relevant groups of transactions operates 
differently, and has different d efining features. Thus, conclusions regarding pre -2007 NASA 
research contracts and DoD assistance instruments do not apply to DoD general research 
contracts, contracts under the DoD military aircraft program elements, the FAA CLEEN OTA, or 
post-2006 NASA c ontracts. The differing characteristics of these measures lead to different results. 
In particular:  
 As the Appellate Body found, all DoD assistance instruments and the pre -2007 NASA 
contracts are "akin to a species of joint venture " and, therefore, a "direct transfer of 
funds " under Article 1.1(a)(i) of the SCM Agreement.  
 DoD contracts under the gene ral research program elements, which in our view are 
outside the Panel 's terms of reference, are most accurately described as purchases of 
services.  
 The largest DoD military aircraft program elements, KC -46 and P -8A, are most 
accurately described as purc hases of goods.  
 For many other "military aircraft " program elements, DoD purchased upgrades or 
enhancements that involved services rather than goods. Thus, these types of 
transactions are best understood as purchases of services.  
 NASA 's post -2006 contr acts are best understood as purchases of services.WT/DS353/RW/ Add.1 
 
- C-19 - 
 
  B. Benefit  
4. The Appellate Body began the analysis in Canada – Renewable Energy by referring back to 
its finding in Canada – Aircraft  that "whether a benefit has been conferred should be determined 
by ass essing whether the recipient has received a "financial contribution " on terms more 
favourable than those available to the recipient in the market. " It confirmed that Article 14 of the 
SCM Agreement is "relevant context to determine whether a subsidy exists ." This is 
uncontroversial, and applies to the evaluation of the benefit conferred by any financial 
contribution.  
5. The EU has cited nothing that would support its assertion that a private party entering into 
the "species of joint venture " represented by NASA contracts and DoD assistance instruments 
would never accept the division of intellectual property rights that NASA and DoD did in the 
modified transactions.  
6. Article 14 of the SCM Agreement indicates that the method for calculating the value of the 
benefit will depend on the type of financial contribution at issue. Thus, the fact that the other R&D 
transactions – DoD a nd NASA procurement contracts – involve purchases of services or purchases 
of goods means that the analysis of the existence of a bene fit will differ from a transaction treated 
as a "species of joint venture. " Specifically, the evaluation will focus on the adequacy of 
remuneration paid by the government for what it obtained from the contractor. The pricing 
methodology adopted in the DoD contract and the FAA CLEEN OTA ensured that they provided no 
more remuneration than was adequate for the work conducted by Boeing, and the EU has never 
demonstrated otherwise.  
C. Specificity  
7. The subsidies alleged by the EU consist of entering into trans actions akin to joint ventures 
with intellectual property provisions supposedly more favorable than a market transaction would 
provide. Those aspects of the transactions are governed by broader U.S. government procurement 
regulations, which apply over all agencies in all sectors. They are accordingly not specific.  
D. Whether Procurement Contracts under the 23 Original DoD Program Elements are 
within the Panel 's Terms of Reference  
8. In US – Large Civil Aircraft , the Appellate Body describes "the measures be fore us " or "the 
dispute before us " as being "NASA procurement contracts and USDOD assistance instruments. " 
The omission of "USDOD procurement contracts " from these descriptions of the matter signals that 
the Appellate Body did not consider those measures to be "before us. " Therefore, the finding of the 
original panel was adopted by the DSB, and is not subject to re -litigation in this proceeding.  
II. OTHER MEASURES  
9. The EU 's remaining subsidy claims attempt to exaggerate the size of financial contribution s 
that, if they were subsidies, would simply be too small to cause the adverse effects alleged by the 
EU. The EU also attempts challenging measures that have no relation to the original measures or 
to the steps the United States has taken to comply with th e DSB 's recommendations and rulings.  
A. Measures Not Within the Terms of Reference of This Compliance Proceeding  
1. South Carolina Measures  
10. The EU urges this compliance Panel to radically depart from the approach of prior panels and 
the Appellate Body on close nexus by ignoring the absence of any similarity in terms of the 
measures ' design and architecture, by ignoring the absence of any overlap in their geographical 
scope, and by ignoring the absence of any link in terms of effects. The implication of the EU 's 
position is that the only connection necessary for a finding of close nexus is the identity of the 
recipient of the alleged subsidy, but the EU explicitly denies that such a link is sufficient. In any 
event, the EU fails to establish a prima facie  case of WTO -inconsistency with respect to the Project 
Site Lease, the provision of facilities and infrastructure, the FILOT Agreements, and the WT/DS353/RW/ Add.1  
 
- C-20 - 
  apportionment agreement – as well as the other measures addressed in the U.S. written 
submissions.  
2. FAA's CLE EN Program  
11. The EU 's assertion of a close nexus between the NASA measures and the CLEEN program 
fail. The EU 's claims of "technological and organizational continuity " between these measures refer 
to common environmental goals and routine government cons ultation. The EU ignores entirely the 
structure of the measures, including important differences between the CLEEN program and the 
NASA procurement contracts subject to the DSB 's recommendations and rulings. In any event, 
there is no evidence that the CLEE N program confers a subsidy, as discussed further in the U.S. 
written submissions.  
3. Other Washington Measures  
12. The Washington B&O tax rate reduction is the only Washington measure subject to the 
DSB's recommendations and rulings. The EU recognizes tha t the value of that measure is too small 
to cause any adverse effects, so it attempts to take another bite at the apple with regard to four 
Washington State measures that the EU unsuccessfully challenged in the original proceeding, and 
by attempting to exp and the dispute to two other Washington measures that were not challenged 
in the original proceeding and have no bearing on compliance. None of these measures is a 
"measure taken to comply " and the EU is precluded from re -litigating claims that it raised 
unsuccessfully in the original dispute.  
B. Non-R&D Measures That Have Been Withdrawn  
1. FSC/ETI  
13. The United States notified the DSB that it had enacted legislation terminating FSC/ETI tax 
benefits and has confirmed that Boeing has not received FSC/ETI t ax benefits after 2006. The EU 
has presented no evidence that Boeing has actually received FSC/ETI tax benefits after 2006 and 
has therefore not met its burden.  
2. Kansas IRBs  
14. The United States has withdrawn the subsidy associated with the City of Wich ita's issuance 
of IRBs because the subsidy is no longer specific. The United States has also taken appropriate 
steps to remove the subsidy 's adverse effects, by ensuring that no further IRBs are issued to 
Boeing.  
C. Prohibited Subsidies  
15. The EU alleges that every measure challenged in this compliance dispute is a prohibited 
export subsidy contingent on export performance, but it has failed to establish a de facto  tie 
between subsidies and export sales. The EU has also failed to support its arguments that  every 
single measure being challenged in this compliance dispute is a prohibited import substitution 
subsidy, and also violates Article III of the GATT 1994.  
III. ADVERSE  EFFECTS  
16. In an effort to obtain a finding of non -compliance, the EU has sought to  expand this 
compliance proceeding to the point where it would become a sprawling, unruly endeavor. We have 
already detailed how, as part of this effort, the EU attempts to bring in subsidies that existed at 
the time of the original proceeding but were not  challenged. The EU alleges adverse effects from 
new subsidies allegedly conferred by South Carolina and FAA, neither of which was involved in the 
original proceeding. The EU even raises numerous arguments that were already rejected in the 
original proceed ing. In addition, the EU argues that the product markets that prevailed during the 
original reference period have transformed into seven markets, including four monopoly markets, 
and one "non-market. " And nearly all alleged post -2006 R&D subsidies, unlike R&D subsidies in 
the original proceeding, result in lower licensing fees for Boeing. By the time the EU is done, its 
compliance case bears almost no resemblance to the case it pursued in the original proceeding.  WT/DS353/RW/ Add.1 
 
- C-21 - 
 
  17. The EU has a well -founded fear that an analysis based on the findings from the original 
proceeding – which appropriately shaped the U.S. compliance steps – would prove particularly 
challenging for its claims. The price effects findings in the original proceeding – made only with 
respect to two sales campaigns in the 100 -200 seat market – were driven overwhelmingly by 
FSC/ETI. There can be no rational disagreement about whether FSC/ETI has been withdrawn. The 
technology effects findings in the original proceeding – made only with respect to the 2 00-300 seat 
market – were driven by NASA subsidies found to have accelerated the launch of the 787. 
Assuming for the sake of argument that they are to some extent un -withdrawn, it would be 
extremely difficult to show that adverse effects are being caused b y substantially reduced financial 
contributions on terms even closer to what the market offers. Unsurprisingly, the EU does not 
attempt to do so. Indeed, despite that NASA subsidies drove the finding in the original proceeding 
that U.S. R&D subsidies cause d technology effects, the EU conceded that it cannot show that any 
post-2006 NASA programs are causing technology effects.  
18. In light of the overwhelming challenges the EU would face in trying to show non -compliance 
based on the reasoning and findings fr om the original proceeding, the EU instead, effectively 
creates a new case that it hopes will allow it to escape those overwhelming challenges. The EU 
distorts the finding from the original proceeding that NASA and DoD subsidies accelerated the 
launch and promised delivery date of the 787, and the relevance of this finding to the appropriate 
counterfactual. The EU also attempts to inflate the amount of potential subsidies by piling 
additional alleged subsidies on top of those found to be actionable in the o riginal proceeding. 
These include subsidies that cannot possibly provide an advantage to Boeing in the LCA 
marketplace, such as the P -8A program and the KC -46 program, as well as subsidies that are not 
properly raised.  
19. The EU criticizes the United Stat es for trying to "atomize " the claims, while it is the EU that 
deviates from the collective assessment structure in the original proceeding. Moreover, the EU 
ignores the Appellate Body 's guidance that effects caused genuinely but not substantially by a 
subsidy can only be cumulated with the effects of a subsidy already found to have a genuine and 
substantial relationship with the relevant market phenomena.  
20. The EU argues that the product markets have changed since the original reference period, 
but it h as failed to prove that there are now seven markets and one non -market for LCA. The EU 
has not explained – because there is no explanation – why, if the EU 's markets accurately reflect 
the contours of LCA competition, no one has ever analyzed the market in  this way. Moreover, the 
EU's sole piece of evidence in support of this market structure – the Mourey Statement – is deeply 
flawed. There is thus no basis to deviate from the market delineation relied upon by the original 
panel and the Appellate Body.  
21. The Appellate Body upheld the finding that, absent the R&D subsidies, Boeing would have 
launched the 787 later than 2004. To properly attribute any market phenomena to the subsidies, 
the appropriate counterfactual inquires as to whether certain market phe nomena would exist in 
the absence of the subsidies. Because the R&D subsidies causing technology effects were found to 
accelerate the launch and promised first deliveries of the 787, it is important to determine when 
the 787 would have been launched in the  absence of the subsidies. The Boeing engineers ' estimate 
indicates that Boeing could have launched the 787 no later than 2006, which is the year Airbus 
was eventually able to launch the A350 XWB, following the misstep of pursuing the Original A350. 
The fi ndings of the original proceeding in no way support that, absent the R&D subsidies, there 
would have been no advancement in knowledge and experience relevant to the launch of the 787 
between the late 1980s and the early 2000s. The EU 's contrary assumption leads it to the extreme 
position that this Panel 's report would be issued before the 787 would be launched.  
22. In conclusion, the United States emphasizes the need to remember that this is a compliance 
proceeding. The EU should not be permitted to re -litigate resolved issues or raise unrelated 
measures and measures that existed at the time of the original proceeding but were not 
challenged at that time. The EU should not be permitted to ignore the finding in the original 
proceeding that R&D subsidies accelerated  the 787 launch, but did not make an otherwise unviable 
aircraft possible. The EU should not be permitted to assume that subsidies cause adverse effects 
through price effects when the sole subsidy found to be a genuine and substantial cause of such 
effects in the original proceeding – FSC/ETI – has unquestionably been withdrawn. The EU should 
not be permitted to twist the product market delineation despite the absence of any credible 
evidence that there are seven LCA markets, four of which are monopol y markets, and one non -WT/DS353/RW/ Add.1  
 
- C-22 - 
  market. And the EU certainly should not be permitted to engage in obfuscation to the detriment of 
the U.S. ability to defend itself through a fair process and the Panel 's ability to reach an objective 
assessment of the matter. A prop er analysis will reveal that the United States has complied with 
the DSB 's recommendations and rulings.  
 
_______________  
 
 
 WT/DS353/RW/ Add.1  
 
- D-1 - 
 
  ANNEX D  
ARGUMENTS OF THE THI RD PARTIES  
Contents  Page  
Annex D -1 Executive Summary of the written submission of Brazil  D-2 
Annex D -2 Executive Summary of the statement of Brazil at the Panel meeting  D-7 
Annex D -3 Executive Summary of the written submission of Canada  D-9 
Annex D -4 Executive Summary of the statement of Canada at the Panel meeting  D-13 
Annex D -5 Executive Summary of the written submission of Japan  D-17 
Annex D -6 Executive Summary of the statement of Japan at the Panel meeting  D-20 
Annex D -7 Executive Summary of the written submission of the Republic of Korea  D-23 
Annex D -8 Executive Summary of the statement of the Republic of Korea at the Panel 
meeting  D-27 
 WT/DS353/RW/ Add.1  
 
- D-2 - 
  ANNEX D -1 
EXECUTIVE SUMMARY OF  THE WRITTEN  
SUBMISSION OF BRAZIL  
I. INTRODUCTION  
1. Brazil 's comments focus on the following issues: (i) the violation of the third parties ' rights 
under Article 10 of the DSU g iven the untimely access to the parties ' requests for preliminary 
rulings and related documents; (ii) the recourse to the investigative powers of the Panel under 
Article 13 of the DSU in substitution of the procedures established by Annex V of the Agreemen t 
on Subsidies and Countervailing Measures ( "SCM Agreement ") in case of actionable subsidies 
causing serious prejudice to the interests of another Member; (iii) the jurisdictional scope of the 
compliance Panel under Article 21.5 of the DSU with respect to re-litigation of claims; (iv) the 
scope of the obligation under Article 7.8 of the SCM Agreement to take appropriate steps to 
remove the adverse effects of the subsidy or to withdraw the subsidies; (v) the difference in scope 
of Article III:4 of the Genera l Agreement on Tariffs and Trade ( "GATT ") and Article 3.1(b) of the 
SCM Agreement; (vi) the proper approach to determining the existence of de facto export 
contingency; and (vii) the analysis of "purchase of services " within the scope of the SCM 
Agreement.   
II. THIRD PARTIES HAVE A  RIGHT TO TIMELY ACCE SS TO PRELIMINARY RU LING 
REQUESTS AND TO BE H EARD AT THAT STAGE O F THE LEGAL PROCEEDI NG 
2. Brazil reaffirmed the position that third parties should have been granted access to all 
submissions made by the parti es to the dispute and should have been able to express their views 
in a timely manner in light of Article 10.1 of the DSU, which seeks to ensure that the rights of all 
"Members under a covered agreement at issue in the dispute shall be fully taken into acc ount 
during the panel process ". 
3. Article 10 of the DSU grants third parties the right to have access to all submissions until the 
first meetings of the parties to the dispute and to be heard, as was stated by the Appellate Body in 
US – Tax Treatment for "Foreign Sales Corporations " (21.5)1 and of the Panel in Canada — Wheat 
Exports and Grain Imports2. 
4. Therefore, Brazil expressed its utmost wish that this lack of access to third parties of the 
submissions made by the parties does not become a recurring event in the WTO dispute system, 
as this impairment also hinders the dispute settlement process itself.  
III. THE REPLACEMENT OF A NNEX V PROCEDURES OF  THE SCM AGREEMENT BY  THE 
PANEL 'S INVESTIGATIVE POWE RS UNDER ARTICLE 13 OF THE DSU IS A SECO ND-
BEST SOLUTIO N 
5. Brazil raised serious doubts on whether the authority of panels under Article 13 of the DSU 
may replace or perform the same functions of the procedures under Annex V of the SCM 
Agreement without affecting due process.  
6. For Brazil, the Annex V proce dures and the Panel 's Article 13 powers are not 
interchangeable. The Annex V procedures have been specifically designed to permit the 
complaining party to gather the necessary information required to "establish the existence and 
amount of subsidization, th e value of total sales of the subsidized firms, as well as information 
necessary to analyze the adverse effects caused by the subsidized product. "3 Brazil contends that 
the Panel 's standard of review of the evidence should take into account the particulari ties of the 
case and would like to emphasize the special circumstances of the case which led to the use of 
Article 13 procedures in substitution of Annex V procedures and insists that this turn of events 
                                               
1 Appellate Body Report, US – Tax Treatment for "Foreign Sales Corporations " (21.5) , para. 245.  
2 Panel Report, Canada — Wheat Exports and Grain Imports , para. 6.6.  
3 SCM Annex V, para. 2.  WT/DS353/RW/ Add.1  
 
- D-3 - 
 
  does not repeat in future disputes considering all t he peculiarities and different legal consequences 
Annex V procedures and Article 13 powers possess and entail.  
IV. AN ARTICLE 21.5 PROC EEDING IS NOT A FORU M FOR RETRIAL OR REM AND OF THE 
PANEL 'S FINDINGS  
7. Brazil believes compliance proceedings should not be overly formalistic, but nevertheless 
cannot unfairly give complainants a "second bite of the apple. " Only in exceptional instances, in 
which new facts or evidence become available that were not available at the time of the original 
proceedings, will it be appropriate to re -examine a measure in a compliance proceeding.  
8. Brazil notes that two of the EU 's claims do not appear to be properly before this compliance 
panel. First, in the original proceeding, the EU challenged DoD procurement contracts under 2 3 
programs (the "old" PE numbers), but the original panel found that the research funded under 
these "old" PE numbers was not a subsidy.4 As the EU itself declined from requesting the 
completion of the analysis there is not even a decision by the AB in tha t regard. Second, and more 
worryingly, in its panel request, the EU made claims under Article III:4 of GATT 1994 with regard 
to several of the measures listed, which were not dealt with during the original proceedings, since 
no arguments regarding those cl aims were ever presented.5 
9. Brazil would like therefore to draw a clear distinction between claims relating to a new 
measure that is closely related to the measure found to be inconsistent with a covered agreement 
(and, thus, falling more readily within the scope of the compliance proceeding), and new claims 
relating to a measure for which the original panel rejected the complaining Member 's claims of 
inconsistency with a covered agreement. The latter type of measure should be held to a higher 
standard to  be included in the terms of reference of a compliance panel. Indeed, such measures 
are to be presumed to be consistent with WTO obligations. To include such a measure within the 
scope of an Article 21.5 proceeding, the complaining Member would need to dem onstrate that the 
measure has undergone significant changes such that it is a measure taken to comply with the 
adverse WTO decision.  
V. THE OBLIGATION TO "WITHDRAW THE SUBSIDY " OR TO TAKE "APPROPRIATE 
STEPS TO REMOVE THE ADVERSE EFFECTS " REQUIRES A POSITIV E ACTION THAT 
REMOVES THE COMPETIT IVE ADVANTAGE OR PUT S AN END TO THE SUBS IDY 
10. Brazil does not take a position on whether the specific measures taken by the United States 
were sufficient for purposes of Article 7.8 of the SCM Agreement and Article 19 of  the DSU. Brazil 
wishes to focus on the proper interpretative approach to the important obligation under Article 7.8 
of the SCM Agreement to "take appropriate steps to remove the adverse effects " or to "withdraw 
the subsidy. " 
11. First, Brazil considers th at the use of the terms "shall take appropriate steps " means that a 
Member is generally expected to take an affirmative, appropriate action and normally cannot be 
considered as having complied with the obligation of Article 7.8 of the SCM Agreement if it d oes 
not actively intervene to remove the adverse effects or to withdraw the subsidy, as provided by 
the Appellate Body found in U.S. – Upland Cotton6. 
12. Second, the focus of Article 7.8 of the SCM Agreement is on remedying the specific problem 
found to e xist that nullified or impaired the benefits accruing under the SCM Agreement to the 
complaining Member. The focus of Part III of the SCM Agreement on "actionable subsidies " is 
primarily on the adverse effects caused by the use of a subsidy, not on the exi stence of the 
subsidy itself. That is also the focus of Article 7.8 of the SCM Agreement, which requires the 
implementing Member to withdraw the subsidy or to take appropriate steps to remove its adverse 
effects. As clarified by the panel and the Appellate  Body in the original proceeding, there is no 
need to demonstrate that the subsidy benefit continues to exist for a finding of adverse effects. 
Therefore, the fact that a subsidy was granted in the past, that the "benefit " has expired, and that 
the subsidy  no longer exists at the time of implementation does not prevent a finding of adverse 
effects caused by subsidies granted in the past. The key question in such circumstances concerns 
                                               
4 US – Large Civil Aircraft (Panel) , paras. 7.1113, 7.1171.  
5 EU Panel Request, p. 13.  
6 Appellate Body report, U.S. – Upland Cotton (Article 21.5) , para. 236.  WT/DS353/RW/ Add.1  
 
- D-4 - 
  the establishment of a "genuine and substantial " relationship of cause an d effect, which may 
become more difficult, but not impossible, with the passage of time after the expiration of the 
subsidy.  
13. Brazil recalls the position that it espoused in the context of the U.S. – Upland Cotton dispute 
-- if a panel makes a finding of "present " adverse effects, such a finding applies beyond the 
historical period considered by the panel. Therefore, the Member whose subsidies cause such 
adverse effects is obligated under Article 7.8 of the SCM Agreement to take appropriate steps to 
fully withdraw the present, ongoing, and future effects of the subsidies.7 
14. Brazil considers the present case as an opportunity for the panel to clarify how Members are 
expected to comply with rulings on adverse effects relating to non -recurring subsidies,  which 
sometimes have been granted many years ago and fully disbursed, but may continue to cause 
adverse effects in the market. The goal of compliance with the subsidies disciplines is to restore 
the level playing field. The panel, therefore, must determin e, on the one hand, the positive actions 
required to bring a measure into conformity with WTO obligations, while carefully scrutinizing the 
causal relationship of past subsidies and the survival of their adverse effects, on the other.  
VI. SCM ARTICLE 3.1( b) AND GATT ARTICLE III:4 CLAIMS ARE DIFFERENT IN SCOPE, 
REQUIRE DISTINCTIVE LEGAL ANALYSIS, AND MUST RELY ON CONCRETE AND 
CONSISTENT EVIDENCE  
15. The EU argues that all of the U.S. measures at issue in this dispute are applied so as to 
afford protection t o domestic production of U.S. like products (namely, parts and materials used in 
the production of Boeing large civil aircraft) and are, thus, inconsistent in fact with Article 3.1(b) of 
the SCM Agreement and with GATT Article III:4.8 By relying on exactly  the same evidence of 
"illustrative statements " in support of its claims under SCM Article 3.1(b) and GATT Article III:4, 
the EU seems to imply that a finding that the U.S. measures ar e inconsistent with SCM 
Article  3.1(b) would automatically result in a f inding of inconsistency with GATT Article III:4. This 
is not necessarily the case.  
16. It should be noted that both SCM Article 3.1(b) and GATT Article III:4 address situations 
involving discriminatory conduct. Yet, albeit related in some cases, these prov isions have 
differences in scope and set out different obligations that are not subject to the same legal 
analysis as already clarified by the Panel in Canada – Autos9. In addition, GATT Article III:8(b) 
explicitly permits Members to limit the provision of  subsidies to their domestic producers by 
excluding such measures from the reach of the national treatment provisions of the GATT.  
17. In sum, a violation under SCM Article 3.1(b) does not necessarily and directly imply a 
violation under GATT Article III:4 . Due to differences in scope and obligations, a specific and 
separate legal analysis for each of these provisions must be carried out.  
18. Moreover, Brazil is of the view that claims under SCM Article 3 and GATT Article III:4 must 
rely on concrete and con sistent evidence, which need not be identical. The difference in scope 
suggests that the threshold of evidence to demonstrate the violation may not be the same for each 
provision and requires a proper and specific assessment of the evidence on the record. In any 
case, Brazil is not convinced that relying exclusively on a list of "illustrative statements " of officials 
and politicians is sufficient to fulfill the different thresholds required by SCM Article 3.1(b) and 
GATT Article III:4. These "statements " could only constitute meaningful evidence when 
accompanied by evidence of factors that build a case of de facto inconsistency to the 
aforementioned provisions based on an assessment of the total configuration of the facts.  
VII. SALES RATIOS ARE NEITHER DECIS IVE NOR NECESSARY FOR THE 
DEMONSTRATION OF EXPORT CONTINGENCY UNDER SCM ARTICLE 3.1( a)  
19. The EU claims that the United States is maintaining subsidies conditioned in fact  upon actual 
or anticipated export performance in violation of SCM Article 3.1(a).10 The EU 's evidence of de 
                                               
7 Appellate Body Report, U.S. – Upland Cotton , para. 223.  
8 EU first written submission , paras. 784-788. 
9 Canada – Autos , Panel Report, para. 10.215.  
10 EU first written submission, para. 737.  WT/DS353/RW/ Add.1  
 
- D-5 - 
 
  facto export contingency includes actual sales ratios, anticipated sales ratios, and "a series of 
representative examples of statements " of the United States and Boeing that are "in the nature 
both of encouragement or direction goi ng forward, and at the same time, of reward for past export 
performance. "11  
20. Brazil does not wish to take a position on whether Boeing 's historical sales ratios, when 
viewed in light of the anticipated demand trends and the rather broad macroeconomic st atements 
contained in the EU 's "series of representative examples of statements " reflect subsidization that is 
geared to induce the promotion of future export performance by the recipient.  Brazil merely takes 
this opportunity to reiterate its general posi tion that the determination of export contingency 
should be based on an examination of the total configuration of facts surrounding the granting of a 
subsidy rather than being based just on an examination of sales ratios.  
21. Brazil considers that a review  of the Appellate Body 's findings in EC – Large Civil Aircraft  
confirms that the evidence for demonstrating de facto  export contingency does not require, in 
whole or in part, the reliance on an analysis of sales ratios. In Brazil 's view, the ratio approach  
proposed by the Appellate Body is one possible piece of additional evidence that could provide 
meaningful information when it involves one of the conditions of the subsidy.  
VIII.  FUNDING UNDER A GOVE RNMENT CONTRACT FOR RESEARCH AND DEVELOP MENT 
SHOULD NOT  BE USED TO SHIELD A MEMBER FROM ITS OBLI GATIONS UNDER THE 
SCM AGREEMENT SIMPLY  BY CHARACTERIZING IT  AS A PURCHASE OF SER VICES  
22. The United States seeks to characterize its post -2006 NASA and certain DoD contracts as 
purchases of services in order to exc lude them from scrutiny under the SCM Agreement based on 
the original panel 's finding – which was mooted by the Appellate Body – that purchases of services 
do not qualify as a financial contribution for purposes of Article 1.1(a)(1) of the SCM Agreement.12  
23. Brazil reaffirms its position already posed to the original13 panel that an interpretation of 
Article 1.1(a)(1) that excludes a priori government research and development measures that 
involve purchases of services from the scope of the SCM Agreement w ould potentially undermine 
the effectiveness of the SCM Agreement. If the U.S. position were to prevail, Members could 
provide billions of dollars in payments directly to a manufacturer to conduct research, the results 
of which are to be shared with the go vernment, and shield this funding from WTO scrutiny by 
simply providing something of nominal value so that it constitutes a purchase of services. Such an 
enormous loophole could not have been intended by the drafters.  
24. In Brazil 's view, monetary contri butions clearly fall within the meaning of a direct transfer of 
funds under Article 1.1(a)(1)(i) of the SCM Agreement. A monetary contribution does not become 
something else simply because the funds may be repaid at a later date (such as for a loan) or 
because other consideration may be provided in return (such as equity or intellectual property). 
Moreover, the drafters of the SCM Agreement expressly contemplated that "assistance for research 
activities conducted by firms or by higher education or research establishments on a contract basis 
with firms " could constitute financial contributions within the meaning of the SCM Agreement, 
because they defined a certain subset of these types of measures as "non-actionable " subsidies 
under Article 8.2(a) of the SCM Agreement.  
25. In any event, Brazil considers that all of the facts and surrounding circumstances should 
dictate whether a particular payment of money or monetary contribution to a recipient falls within 
the scope of Article 1.1(a)(1) of the SCM Agreement . The fact that the government 's transfer of 
money is nominally made within the framework of a services agreement or other type of contract 
should not, without further examination, be sufficient to determine that this transfer does not 
amount to a financia l contribution within the meaning of the SCM Agreement.  
26. Accordingly, in this case, depending on the facts and circumstances surrounding the relevant 
transactions, the Panel may find that some or all of the monetary payments by the U.S. 
government to Bo eing under a particular research and development contract constitutes a de facto  
grant or other type of "direct transfer of funds " to Boeing or to third party recipients, and, 
                                               
11 EU first written submission, para. 757, Exhibit EU -566. 
12 U.S. first written submission, paras. 228 -230, 391.   
13 Third Party Written Submission of Brazil, para. 10 (October 1st, 2007).  WT/DS353/RW/ Add.1  
 
- D-6 - 
  therefore, such payments could amount to a "financial contribution " under Articl e 1.1(a)(1)(i) of 
the SCM Agreement. Whether the funding was provided for adequate remuneration and, thus, 
benefits Boeing would be relevant to the determination of benefit under Article 1.1(b).  
 
 WT/DS353/RW/ Add.1  
 
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  ANNEX D -2 
EXECUTIVE SUMMARY OF  THE STATEMENT OF BRA ZIL 
AT THE PANEL MEETING  
Contains no BCI  
I. INTRODUCTION  
1. Brazil 's comments address the following three issues: (i) the scope of compliance 
proceedings under Article 21.5 of the DSU; (ii) the types of measures, including "purchases of 
services ", covered by the definition of financial contribution under Article 1.1(a)(1) of the SCM 
Agreement; and (iii) the implementing Member 's obligations under Article 7.8 of the SCM 
Agreement to remove the adverse technology effects of R&D subsidies that have not been or 
cannot  be withdrawn.  
II. THE SCOPE OF ARTICLE  21.5 OF THE DSU  
2. Brazil cautions that compliance panels should not be allowed to be used as a forum for a 
complaining Member to re -litigate issues relating to measures that were not found to be 
inconsistent with a  covered agreement in the original proceedings or as a forum to "remand " 
matters that were not taken up by the Appellate Body and where, as a consequence, no 
recommendations and rulings were issued.  
 
3. Brazil recalls that, in the original proceedings, the  European Union appealed the Panel 's 
approach that "purchases of services " were excluded from the disciplines of the SCM Agreement. 
However, the EU did not request that the Appellate Body complete the analysis to determine 
whether, if properly examined, th e procurement contracts constituted a covered "financial 
contribution " conferred a benefit, or caused adverse.  
 
4. In our view, the European Union could have chosen to continue to pursue this issue at the 
Appellate Body proceedings, but instead it decided  not to have the Appellate Body complete the 
analysis. Taking into account the jurisprudence in EC – Bed Linen1, Brazil does not consider that 
the current Article 21.5 proceeding is the appropriate forum to revive this matter unless the Panel 
concludes, by  thorough scrutiny, that there has been a substantial change in the facts that would 
effectively turn these 23 DOD procurement contracts into new but sufficiently related "measures 
taken to comply".  
 
III. THE SCM AGREEMENT AN D THE "PURCHASE OF S ERVICES"  
5. Brazil does not take a position with regard to whether the specific U.S. aeronautics R&D 
measures – post-2006 NASA and certain USDOD contracts – could be characterized as "purchases 
of services", although we recall that the Appellate Body negated and decl ared moot the original 
Panel 's decision which excluded "purchase of services" from the scope of the SCM Agreement.  
 
6. As explained by the Appellate Body in the original proceedings, it is possible that the Panel 
some measures have multiple features, incl uding features of a purchase of services. That does not 
mean, however, that those measures cannot fall within the scope of the SCM Agreement.  
 
7. As provide by the Appellate Body in Canada – Feed-In Tariff Program/Canada – Renewable 
Energy  "a panel should scrutinize the measure both as to its design and operation and identify its 
principal characteristics" and that it would be possible that some transactions may be "complex 
and multifaceted"  and need not fall squarely within a single category.2 The Appellat e Body further 
explained that the fact that there may be some overlap between the types of financial 
contributions set forth in Article 1.1(a)(1) of the SCM Agreement does not lead to a conclusion that 
these types are the same, redundant, or otherwise viol ates the principles of effective treaty 
interpretation.  
                                               
1 EC – Bed Linen , Appellate Body Report (21.5), para. 87.  
2 Canada – Feed-In Tariff Program/Canada – Renewable Energy , Appellate Body Report, paras. 5.120 -
5.121.  WT/DS353/RW/ Add.1  
 
- D-8 - 
  8. In this context, Brazil believes that, in the present case, the Panel must also assess the 
principal characteristics of the measures in light of the terms of Article 1.1(a)(1) to determine 
whether  the measures fall under one or more of the types of financial contribution set out in that 
provision. That a measure may be characterized as a procurement of services is of limited 
relevance to the panel 's assessment under Article 1.1(a)(1). More importan tly, this should not 
prevent the Panel from finding that the measure also has characteristics of a "direct transfer of 
funds" (e.g., equity infusion) or procurement of goods, and, consequently, constitutes a financial 
contribution. With respect to R&D meas ures, Article 8.2(a) and footnote 28 give additional 
contextual support to the inclusion of research activities within the scope of the SCM Agreement.  
IV. ADVERSE TECHNOLOGY E FFECTS OF THE R&D SU BSIDIES AND THE OBLI GATION 
UNDER ARTICLE 7.8 OF  THE SCM AGRE EMENT  
9. Brazil address also the obligation contained in Article 7.8 of the SCM Agreement. In the 
present case, a major issue is to determine, in instances where the United States has not 
withdrawn the subsidy at issue, whether the adverse effects of the subsidy have or have not been 
removed by the United States. This is so because this dispute deals with subsidies having lingering 
technology effects, which are likely to have a competitive impact for a large number of years.  
 
10. As Brazil previously stat ed in these proceedings, the mere fact that the subsidy has been 
granted and the benefit of the financial contribution has been fully received is not directly related 
to the question of continuity of the adverse effects of the relevant subsidies. If the su bsidy has not 
been or cannot be withdrawn, the adverse effects must be removed in order to comply with 
Article  7.8 of the SCM Agreement. Specifically, in the present case, if the challenged measure has 
not been or could not be withdrawn, the United States would have no other option pursuant to 
Article 7.8 than to ensure that the adverse technology effects caused by aeronautics R&D subsidies 
have been fully removed.  
 
11. It is certainly not an easy task to determine how those adverse effects are to be remove d. 
In order to analyze, however, if the United States has taken appropriate steps to remove the 
adverse effects, the Panel could take into account the object and purpose of Part III of the SCM 
Agreement and, more specifically, Articles 5 and 7.8, which cou ld provide some guidance in this 
regard.  
 
12. As it is well known, subsidies confer on companies an advantage that otherwise they would 
not have had. In other words, as the Appellate Body has repeatedly explained, a subsidy makes a 
recipient "better off" than it would be, absent the financial contribution. This advantage allows a 
company to be more competitive and, in the circumstances described in Articles 5 and 6 of the 
SCM Agreement, causes adverse effects to competitors. A logical consequence of these principles 
would be that in order to comply with Article 7.8 – in a situation where the subsidy can no longer 
be withdrawn – the recipient should somehow be made "worse off ", so as to restore the original 
conditions of competition or compensate for an unfa ir advantage.  
 
13. Although there may be difficulties in complying with Article 7.8 of the SCM Agreement – 
especially when it involves non -recurring R&D subsidies that provide a competitive technological 
advantage and cause adverse effects to other WTO Mem bers – the implementing Member should 
be required to demonstrate that "appropriate steps" have been taken that have broken the causal 
link between the non -recurring subsidy and its lingering adverse effects.  WT/DS353/RW/ Add.1  
 
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  ANNEX D -3 
EXECUTIVE SUMMARY OF  THE WRITTEN  
SUBMISSION OF CANADA  
I. INTRODUCTION  
1. Canada addresses below three issues of systemic importance in these compliance 
proceedings.  
II. PROHIBITED EXPORT SU BSIDIES  
2. The European Union failed to demonstrate that subsidies to Boeing constitute a violation of  
Article 3.1(a) of the SCM Agreement.  
3. In the initial proceedings in this dispute, the Appellate Body established the following test to 
determine whether a subsidy is de facto  contingent on anticipated exportation: "[…] is the granting 
of the subsidy ge ared to induce the promotion of future export performance by the recipient? " 
4. The Appellate Body held that the standard for de facto export contingency would be met 
when "[…] the subsidy is granted so as to provide an incentive to the recipient to export  in a way 
that is not simply reflective of the conditions of supply and demand in the domestic and export 
markets undistorted by the granting of the subsidy ". According to the Appellate Body, de facto  
export contingency "[…] must be inferred from the total  configuration of the facts constituting and 
surrounding the granting of the subsidy ". 
5. The European Union fails to demonstrate that subsidies to Boeing are in fact tied to 
anticipated exportation. First, the European Union does not compare data on expor ts as a 
percentage of total sales with baseline data. The European Union presents charts showing export 
sales as a percentage of total sales. The European Union does not provide baseline data 
demonstrating the extent to which Boeing would be expected to ex port in the absence of the 
subsidies. To show, based on the test established by the Appellate Body, that the subsidies are 
skewed towards exports, the European Union would have had to provide data showing that exports 
as a percentage of total sales would h ave been lower in the absence of the subsidies.  
6. Second, the European Union does not demonstrate that increased exports as a percentage 
of total sales are due to subsidies and not merely reflective of a change in market conditions. 
Evidence submitted by the European Union, Airbus' Global Market Forecast, suggests that other 
factors may indeed be at play. This evidence suggests that it is more likely a change in market 
conditions rather than subsidization that accounts for the increase in export sales rela tive to 
domestic sales.  
7. Finally, the European Union also fails to explain how the factual circumstances surrounding 
the granting of the subsidies support a finding of de facto  export contingency. The Appellate Body 
in EC and certain member States ─ Large Civil Aircraft  stated that relevant factors for determining 
de facto  export contingency may include "[...] factual circumstances surrounding the granting of 
the subsidy that provide the context for understanding the mea sure's design, structure, and 
modalities of operation ". The public statements attributable to the United States or to Boeing 
provided by the European Union as evidence do not prove that the subsidies were geared to induce 
export performance.  
III. IMPORT -SUBSTITUTION SUBSIDIES  
8. The European Union also claims that U.S. subsidies granted to Boeing are contingent or 
conditioned in fact upon the use of domestic over imported goods in violation of Article 3.1(b) of 
the SCM Agreement. The European Union contends  that "[...] Boeing is to produce certain goods in 
the United States, which are thus goods of US origin, and which are destined to be used in the 
manufacture of Boeing LCA, to the exclusion of imported goods ". According to the European Union, WT/DS353/RW/ Add.1  
 
- D-10 - 
  taken as a wh ole, the evidence provided by it demonstrates a U.S. policy of favouring the use of 
U.S. domestic goods and labour.  
9. The prohibition in Article 3.1(b) of the SCM Agreement covers situations where the granting 
of a subsidy is contingent on the recipient purchasing  domestic over imported goods. In Canada's 
view, the European Union's position improperly expands the scope of Article 3.1(b) to cover 
subsidies contingent on the recipient producing  a particular intermediate good.  
10. The GATT and the SCM Agreeme nt do not limit a subsidizing Member's ability to define the 
level of production required for subsidy eligibility purposes. As part of this discretion, a Member 
may explicitly require the production of an intermediate good. Similarly, a Member may implicit ly 
require the production of an intermediate good by requiring a subsidy recipient to produce a final 
good or use a particular level of labour in a way that cannot be accomplished without producing an 
intermediate good. A Member's ability to condition the provision of a subsidy on a production 
requirement would be significantly curtailed if a Member could not require the production of an 
intermediate good. A production requirement would then have to be limited to simple assembly 
operations.  
11. Given that m ost manufacturers produce intermediate goods as part of the production of 
their final goods, the European Union's position would negate the right of a subsidizing Member to 
require a subsidy recipient to produce goods, as defined by the subsidizing Member,  in its territory 
in order to receive a subsidy.  
12. The Appellate Body decision in Canada ─ Autos  demonstrates that the European Union's 
position is incorrect.  
IV. SERIOUS PREJUDICE  
13. The European Union's position in these compliance proceedings is that the United States has 
neither withdrawn the subsidies nor removed their adverse effects. The European Union submits 
that non -withdrawn and additional U.S. subsidies to Boeing continue to cause adverse effects to 
the interests of the European Union.  
14. In response, the United States argues that it has either withdrawn the relevant subsidies or  
taken appropriate steps to remove their adverse effects. One of the United States' claims is that if 
Boeing had not received the subsidies at issue, it would nevertheless have launched the 787, with 
its technology advances, well before the end of the impl ementation period.  
15. Canada submits that a  compliance panel is not required to conduct a counterfactual analysis  
assess ing what the situation would be if the subsidies at issue had never been granted.  A 
compliance panel is required to assess what the sit uation would be if the subsidizing Member had 
withdrawn the subsidies at issue by the end of the implementation period.  
16. Canada sets out below the legal framework that this Panel should use in assessing whether 
the United States complies with its obliga tions under Articles 5, 6 and 7.8 of the SCM Agreement. 
Canada also makes observations as to how this framework should be applied to the facts of this 
dispute.  
A. The Legal Framework  
17. Article 7.8 of the SCM Agreement provides that when a panel or the Ap pellate Body finds 
that a subsidy has resulted in adverse effects to the interests of a complaining Member, the 
subsidizing Member must either withdraw the subsidy or remove its adverse effects. These 
alternatives provide a logical remedy to a Member's bre ach of its obligations under Articles 5 and 
6. If a Member chooses the first option, there is no longer a subsidy. If a Member chooses the 
second option, although the subsidy may still be present, it no longer causes adverse effects.  
18. Bearing in mind th is legal framework, Canada will make observations with respect to 
positions taken by the Parties on two causation issues. The first issue concerns aircraft deliveries 
made pursuant to orders placed during the original reference period. The second issue con cerns WT/DS353/RW/ Add.1  
 
- D-11 - 
 
  technology effects of Research & Development (R&D) subsidies. Finally, we recall the importance 
of considering the magnitude of the relevant subsidies when assessing causation.  
B. Deliveries Made Pursuant to Orders Placed During the Original Referenc e 
Period  
19. In the initial proceedings in this dispute, the Panel made findings of lost sales and price 
suppression of Airbus aircraft in relation to orders for Boeing 787 made during the original 
reference period. In these compliance proceedings, the Eur opean Union claims that the 
United States has failed to remove the adverse effects caused by the subsidies because deliveries 
continue to be made pursuant to these orders. The United States responds that the Panel should 
not consider this claim given that the aircraft model being delivered by Airbus (A350XWB) is not 
the one for which the lost sales or price suppression findings were made in the initial proceedings 
(A330 or Original A350).  
20. Even if the Panel decided to consider the European Union's claim,  the claim should fail. It is 
not sufficient for the European Union to establish that current and future deliveries are related to 
orders placed during the original reference period. The European Union must establish that these 
Boeing deliveries and their negative effects on Airbus (lost sales, price suppression) are 
attributable to the presence of subsidies at the end of the implementation period. Pursuant to a 
proper counterfactual analysis, the European Union should have established that in the absence o f 
the subsidies at the end of the implementation period, the situation would have been different. The 
European Union did not do so.  
C. Technology Effects of R&D Subsidies  
21. In the initial proceedings in this dispute, the Panel and the Appellate Body foun d that 
aeronautics R&D subsidies provided by the U.S. government had allowed Boeing to launch a 
technologically -advanced 787 at the time it did and caused lost sales, price suppression and threat 
of displacement and impedance to Airbus.  
22. In these compli ance proceedings, the European Union claims that R&D subsidies have 
similar effects. The United States replies that the R&D subsidies no longer cause adverse effects 
given that in the absence of these subsidies Boeing would have launched the 787 significan tly 
before the end of the implementation period. Therefore, according to the United States, the effects 
that the market presence and the pricing of the 787 may have on Airbus aircraft can no longer be 
attributed to the R&D subsidies.  
23. Canada submits th at the counterfactual causation analysis used by the United States is not 
required in compliance proceedings. A proper counterfactual analysis requires the identification of 
the situation that would prevail in the absence of subsidies at the end of the imp lementation 
period. What would be the situation if the subsidies had been withdrawn at the end of the 
implementation period? If the European Union fails to demonstrate that the situation would be any 
different, this Panel cannot find that the R&D subsidies  cause adverse effects.  
24. The United States claims that even if the R&D subsidies had never been provided, the 
situation would not be different at the end of the implementation period. It could be argued that 
through such a demonstration the United State s would also implicitly demonstrate that the 
subsidies in existence at the end of the implementation period do not cause adverse effects.  
25. Yet, it is important from a systemic point of view that the required test be set out. The 
counterfactual situatio n that needs to be identified in a counterfactual analysis is not one where 
the subsidies have never been granted but rather one where the subsidies at issue have been 
withdrawn by the end of the implementation period.  
26. Therefore, Canada invites the Pa nel to clearly describe the counterfactual analysis required 
in compliance proceedings before addressing the Parties' arguments in this dispute.  WT/DS353/RW/ Add.1  
 
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  D. The Relevance of the Magnitude of Subsidies when Assessing Causation  
27. Canada wishes to highlight the imp ortance of taking into account the magnitude of subsidies 
when analysing their effects on prices. In the original proceedings, the Appellate Body found that 
the panel did not provide a proper legal basis for its finding that price suppression, lost sales a nd 
displacement and impedance were the effects of tied tax subsidies.  
28. The fact that the effects of the subsidies will likely vary depending on their relative 
magnitude as compared to prices, production costs, overall size of the market or sales of a 
company in the market, warrants a careful analysis. This holds true, in particular, in case of a 
small subsidy. Although a small subsidy may have an effect on prices (depending on its nature, the 
circumstances of its provision, market structure and condition s of competition), a panel must 
provide a reasoned and adequate explanation if it so concludes. The Appellate Body confirmed this 
view in US ─ Large Civil Aircraft (2nd complaint) . 
 
 WT/DS353/RW/ Add.1  
 
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  ANNEX D -4 
EXECUTIVE SUMMARY OF  THE STATEMENT OF CAN ADA 
AT THE PANEL MEETING  
I. INTRODUCTION  
1. Canada will address the following issues in this statement: the scope of compliance 
proceedings, certain issues relate d to prohibited export and import substitution subsidies, and the 
proper counterfactual analysis to be used in conducting a serious prejudice analysis . 
II. THE SCOPE OF COMPLIA NCE PROCEEDINGS  
2. The European Union alleges that all U.S. measures included in  its compliance panel request 
constitute prohibited subsidies under Articles 3.1(a) and 3.1(b) of the Agreement on Subsidies and 
Countervailing Measures . Canada would like to make a few observations regarding the scope of 
these proceedings in relation to t he prohibited subsidy claims advanced by the European Union.  
3. Appellate Body jurisprudence sets out a number of principles limiting the scope of 
compliance proceedings. The Panel should keep those principles in mind in considering the 
European Union's pr ohibited subsidy claims.  
4. Jurisprudence precludes claims that have been finally decided by a panel or the Appellate 
Body from being re -litigated before an Article 21.5 panel. This prevents a Member that failed to 
establish a prima facie  case regarding a n element of a measure in the original proceedings from 
re-litigating that claim with respect to the same unchanged element in compliance proceedings. 
Allowing the complainant to make the same claim twice would give it an unfair "second chance" 
before a co mpliance panel.  
5. This principle applies, for example, to the European Union's request that the Panel find that 
the Washington State B&O tax rate reductions are subsidies that are de facto  export contingent 
and thus prohibited under Article 3.1(a) of the  SCM Agreement. The European Union made the 
same claim in the original proceedings and does not demonstrate here that the Washington State 
B&O tax rate reductions include new elements that would permit a new claim under Article 3.1(a).  
6. Jurisprudence al so ordinarily precludes a party from bringing a new claim against an 
unchanged element of a measure that was before the original panel and that the party could have 
challenged before that panel.  
7. This principle applies to the claim advanced under Articl e 3.1(b) by the European Union that 
the Washington State B&O tax is an import substitution subsidy. The European Union failed to 
make such a claim before the original panel and does not demonstrate in these proceedings that 
its claim is directed at a chang ed element of the measure.  
8. The United States argues that a number of the European Union's claims are not properly 
before this Panel. The Panel should carefully consider this issue.  
III. PROHIBITED EXPORT SU BSIDIES  
9. The European Union claims that al l the U.S. measures covered by its compliance panel 
request are prohibited export subsidies either "in law" or "in fact". Canada believes the European 
Union has applied improperly the Appellate Body's articulation of one approach to making a de 
facto prohibited export subsidy determination.  
10. The Appellate Body in EC – Aircraft  held that a subsidy is contingent in fact on anticipated 
export where the granting of the subsidy is geared to induce the promotion of future export 
performance by the recipient. This standard is met when the subsidy is granted so as to provide an 
incentive to the recipient to export in a way that is not simply reflective of the conditions of supply 
and demand in the domestic and export markets undistorted by the granting of the su bsidy.  WT/DS353/RW/ Add.1  
 
- D-14 - 
  11. The European Union appears to rely on one possible method suggested by the Appellate 
Body to demonstrate the skewing of anticipated sales towards exportation. This method is based 
on a comparison between the ratio of anticipated  export and domes tic sales of the subsidized 
product as a consequence of the granting of the subsidy, and the situation in the absence of the 
subsidy.  
12. The European Union, however, does not properly apply the test. First, while the European 
Union refers to an increase i n exports as a percentage of total sales, it does not compare that data 
with baseline data. Without data showing Boeing's export sales as a percentage of total sales 
absent the subsidy, a meaningful comparison that could indicate a favouring of exports by the 
subsidy is not possible. To show, based on the test established by the Appellate Body, that the 
subsidies are skewed towards exports, the European Union would have had to provide data 
showing that exports as a percentage of total sales would have been lower in the absence of the 
subsidies. Second, the European Union does not demonstrate that increased exports as a 
percentage of total sales are due to subsidies and not merely reflective of a change in market 
conditions. Evidence submitted by the European  Union itself suggests that it is more likely a 
change in market conditions rather than subsidization that accounts for the increase in export 
sales relative to domestic sales.  
13. Where a party can properly demonstrate, based on the ratio test established  by the 
Appellate Body in EC – Aircraft , that anticipated sales of a good are skewed towards exports, this 
would be a strong indication of de facto  export contingency of the subsidy at issue. However, since 
the European Union failed to demonstrate export c ontingency in that way, other evidence is 
necessary.  
14. The Appellate Body in EC – Aircraft  indicated that relevant factors for determining de facto  
export contingency include factual circumstances surrounding the granting of the subsidy that 
provide the context for understanding the measure's design, structure, and modalities of 
operation.  
15. The European Union, however, also fails to explain how the factual circumstances 
surrounding the granting of the subsidies support a finding of de facto  export cont ingency. The 
European Union refers to broad statements by U.S. government officials testifying to Boeing's 
success in exporting aircraft. These statements do not prove that the subsidies were geared to 
induce export performance.  
16. The European Union thu s failed to provide the evidence necessary to demonstrate that the 
subsidies are contingent in fact on exportation.  
IV. IMPORT SUBSTITUTION SUBSIDIES  
17. Canada will comment on one aspect of the European Union's claims regarding import 
substitution subsidi es under Article 3.1(b) of the SCM Agreement.  
18. The prohibition in Article 3.1(b) covers situations where the granting of a subsidy is 
contingent on the recipient purchasing  domestic over imported goods. In Canada's view, the 
European Union's position i mproperly expands the scope of Article 3.1(b) to cover subsidies 
contingent on the recipient producing  a particular intermediate good.  
19. Canada considers that nothing in the General Agreement on Tariffs and Trade  or SCM 
Agreement prohibits a Member from granting subsidies contingent on a recipient producing goods 
in its territory. In fact, the relevant context of GATT Article III:8(b) demonstrates why such an 
interpretation should be rejected. That Article explicitly allows Members to provide subsidies on ly 
to their domestic producers. A producer of a final good that is required to produce an intermediate 
good is also a producer of the intermediate good. A Member's ability to condition the provision of a 
subsidy on a production requirement would be signifi cantly curtailed if a Member could not require 
the production of an intermediate good. A production requirement would then have to be limited to 
simple assembly operations.  WT/DS353/RW/ Add.1  
 
- D-15 - 
 
  V. SERIOUS PREJUDICE  
20. In commenting on the proper counterfactual analysis to be used in conducting a serious 
prejudice analysis in compliance proceedings, Canada will consider one of the questions that the 
Panel asked the Parties to address in their oral statements. The question concerns the original 
panel's conclusion that, absent th e particular aeronautics R&D subsidies identified in those 
proceedings, Boeing would not have been able to launch an aircraft incorporating all of the 
technologies that were incorporated on the 787 in 2004, with promised deliveries in 2008.  
21. This Panel  asked whether the original panel's conclusion about the timing of the launch of 
the 787 has any relevance for the framing of the appropriate counterfactual question to examine 
the technology effects of the alleged aeronautics R&D subsidies in these compli ance proceedings.  
22. As we will demonstrate in the remainder of this statement, the original panel's conclusion 
about the timing of the launch of the 787 is not directly relevant for the framing of the appropriate 
counterfactual question in these proceedi ngs. Canada will show that a proper counterfactual 
analysis is based on a situation where subsidies have been withdrawn by the end of the 
implementation period. It is not based on a situation where subsidies have never been granted.  
23. In the initial proc eedings in this dispute, the panel and the Appellate Body found that certain 
subsidies provided by the United States to Boeing caused adverse effects, in the form of serious 
prejudice, to the interests of the European Union.  
24. Pursuant to Articles 7.8 a nd 7.9 of the SCM Agreement, the United States had until the end 
of a six -month implementation period to either withdraw the subsidies or remove their adverse 
effects.   
25. The Parties agree that if the United States withdraws a subsidy, it is not required  to remove 
any lingering effects that the subsidy may have. Similarly, if the United States removes the 
adverse effects of a subsidy it is not required to withdraw the subsidy.  
26. In these proceedings, the Panel must determine whether the U.S. subsidies t hat have not 
been withdrawn by the end of the implementation period cause serious prejudice to the interests 
of the European Union.  
27. This determination calls for a counterfactual analysis to assess the situation in the absence 
of the non -withdrawn subs idies. A comparison between the counterfactual situation, without 
subsidies, and the actual situation, with subsidies, allows a proper evaluation of the effects of the 
non-withdrawn subsidies.  
28. A Member satisfies its obligation under Article 7.8 if it w ithdraws subsidies by the end of the 
implementation period. Accordingly, the proper counterfactual analysis to assess the impact of 
non-withdrawn subsidies consists in analysing what the situation would be if these subsidies had 
been withdrawn by the end o f the implementation period. There is no requirement to analyse what 
the situation would be had the subsidies never been granted.  
29. Yet, the Parties in these proceedings are arguing about what the situation would have been 
if the United States had not pr ovided the subsidies that were at issue in the initial proceedings.  
30. The use by the European Union of this improper counterfactual analysis to prove its 
technology effects claims has significant repercussions in these proceedings, which can be 
illustra ted by the following two examples.  
31. First, the European Union claims that the United States has failed to remove the adverse 
effects caused by the subsidies because deliveries continue pursuant to orders made during the 
reference period of the initial p roceedings.  
32. It is not sufficient for the European Union to establish that current and future deliveries are 
related to orders placed during the original reference period.   Pursuant to a proper counterfactual 
analysis, the European Union should have es tablished that in the absence of the non -withdrawn 
subsidies at the end of the implementation period, the situation would have been different. The WT/DS353/RW/ Add.1  
 
- D-16 - 
  European Union did not do so. It did not provide evidence showing that, had the United States 
withdrawn these  subsidies by the end of the implementation period, deliveries would not be taking 
place.  
33. Second, even with respect to orders placed after the end of the implementation period, such 
as those placed earlier this year for the Boeing 787 -10, the European  Union fails to demonstrate 
that the orders would not be placed if the subsidies had been withdrawn by the United States by 
the end of the implementation period.  
34. More generally, the whole assessment of technology effects is vitiated by the use of an 
improper counterfactual analysis. The European Union consistently refers to counterfactual 
situations where the subsidies would never have been provided instead of referring to situations 
where the remaining subsidies would have been withdrawn by the end of the implementation 
period.  
35. Returning to the Panel's question, Canada has demonstrated that the original panel's finding 
on the effects of subsidies on the timing of the 787 launch has limited relevance to these 
proceedings. The crucial question in thi s matter does not relate to the situation that would prevail 
if the particular R&D subsidies identified in the initial proceedings had never been granted. Rather, 
the crucial question concerns the situation that would prevail if the alleged R&D subsidies i n these 
compliance proceedings had been withdrawn by the United States by the end of the 
implementation period.  
 WT/DS353/RW/ Add.1  
 
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  ANNEX D -5 
EXECUTIVE SUMMARY OF  THE WRITTEN  
SUBMISSION OF JAPAN  
I. INTRODUCTION  
1. Japan would like to address four systemic issues relating t o the analysis of adverse effects 
under the WTO Agreement on Subsidies and Countervailing Measures (" SCM Agreement "), namely, 
technological  effects; the importance of the concept of the nature of a subsidy for the causation 
analysis; the issue of export co ntingency of subsidies; and the role of the conditions of 
competition.  
 
II. TECHNOLOGICAL EFFECT S 
2. Regarding the first issue, Japan submits that, in view of the operational mechanism of 
research and development ("R&D") subsidies, it disagrees with the Eu ropean Union's argument 
regarding the technological effects of R&D subsidies.  
 
3. The European Union argues that the adverse effects, which were found to have been  caused 
by R&D subsidies ("pre-2007 R&D subsidies")  by the original panel, still exist primar ily based on 
the "technology causal mechanism ". The European Union argues that Boeing is still able to use 
technology, knowledge and experience  developed and obtained in connection with the pre -2007 
R&D subsidies for Boeing's further development of innovat ive technologies for its current aircraft 
and future LCA.   
 
4. At the same time, the European Union claims that R&D subsidies cause adverse effects 
through a " price causal mechanism ". According to the European Union, through their " price causal 
mechanism " R&D subsidies provide Boeing with additional non -operating cash flow , which enables 
Boeing to lower prices  for its LCA in competitive sales campaigns without harming its profit 
margins.  
 
5. Japan submits that the price causal mechanism, as described by th e European Union, is 
inherent in any subsidy that has such potential  price-related effects.  The benefit conferred by the 
financial contribution allows  the recipient to sell the subsidized product at a price which is lower 
than it would have been  in the abs ence of subsidization. And if t he recipient does so, it consumes 
the "benefit" of subsidies.  Once the "benefit" is consumed in full, the recipient will no longer be 
able to retain its lower prices or further lower them.  
 
6. Even assuming , for the sake of a rgument,  that the contention  of the European Union, as to 
the use of the previously -subsidized technology for the development of new innovative 
technologies , is factually plausible, this does not mean that the assessment of the adverse effects 
can be prope rly based on such a technology causal mechanism.   
 
7. A government provides R&D subsidies because it considers that the recipient has the 
technological potential  to conduct such research activities successfully. The fact that a recipient 
has invented a par ticular technology likely reveals that it must have had a technological potential 
to do so, but merely could not afford to do so  commercially in the absence  of subsidization . The 
proper counterfactual in analyz ing the adverse effects  is whether the recipie nt would have had to 
offer products using the technology it developed  without a subsidy at a higher price , rather than 
whether the recipient could not have invented a particular technology.   
 
8. Consequently, whether R&D subsidies are causing adverse effec ts, in particular whether the 
"spillover" and "sleeper" technologies and aircrafts incorporating such technologies are still  
benefiting from the pre -2007 R&D, can be appropriately analyzed from the perspective of price 
effects caused through the price caus al mechanism .1  
                                               
1 Japan notes that the European Union argues that R&D ae ronautics subsidies have technology effects 
and that " other non -withdrawn aeronautics R&D subsidies " have price effects. (European Union First Writ ten WT/DS353/RW/ Add.1  
 
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  9. Finally, it would be more practical to assess whether the adverse effects have been removed 
from the perspective of the price effects of R&D subsidies rather than through the " technology 
causal mechanism ". 
 
III. THE NATURE OF A SUBS IDY I N THE CONTEXT OF THE  FINDING OF ADVERSE 
EFFECTS  
10. Regarding the second issue, Japan submits that the choice of a proper methodology for the 
causation analysis should take account of the nature of R&D subsidies.   
 
11. Pursuant to Articles 5, 6.2 and 6.3 of the SCM Agreement , a " genuine and substantial 
relationship of cause and effect " between the subsidization and adverse effects must be 
demonstrated.2 The methodology utilized for the establishment of causation should be appropriate 
to the nature, design and operation of the impugned subsidy. The following two aspects of the 
nature of R&D subsidies are relevant.  
 
12. First, R&D subsidies have positive externalities and are principally geared towards increasing 
knowledge, developing technology  and facilitat ing innovation . R&D subsidies, by their nature,  can 
promote outcomes which lead to the development of industry -wide product improvements.  
 
13. Second, R&D subsidies, by their nature, should not provide a competitive advantage to 
inefficient enterprises and  are meaningless unless the recipient has the requisite internal 
competences to achieve the desired result. Consequently, R&D subsidies should be distinguished 
from those that provide a competitive advantage to inefficient enterprises.  
 
14. Japan emphasiz es that the evaluation of the nature of a subsidy is the key to determining 
whether the subsidy is "actionable " for the purpose of the SCM Agreement.  
 
IV. DE FACTO  EXPORT CONTINGENCY  
15. Regarding the third issue, Japan would like to emphasize the importa nce of a ri gorous and 
fact-intensive application of Article 3 .1(a) and Footnote 4 of the SCM Agreement  for the 
determination of the " export contingent " nature of subsidies.  
 
16. The European Union relies on the " anticipated export ratio " test to establish that the 
impugned subsidies constitute prohibited subsidies. The test as applied by the European Union 
reduces the standard for a finding of de facto  export contingency to a mere comparison between 
the anticipated and baseline ratios. As the increase may b e caused by certain market 
developments ( e.g., diverging shifts in cross -price elasticity of demand), such an approach may 
lead to a finding of de facto  export contingency even in the absence of any incentive to increase 
the ratio of export to domestic sal es.  
 
17. Japan considers that such standard is not the appropriate legal standard for establishing de 
facto export contingency.  
 
18. Whether a subsidy is de facto  export -contingent must be inferred from the total 
configuration of the facts constituting an d surrounding the granting of a subsidy, and not merely 
based on a comparison between the anticipated ratio and the baseline ratio. To be indicative of de 
facto export contingency, such a comparison should be supported by evidence showing an 
incentive to s kew anticipated sales towards exports.  
 
19. Further, an endorsement of the " anticipated export ratio " test as applied by the 
European  Union may result in three unintended consequences.  
 
                                                                                                                                               
Submission, at para. 980). Japan also notes that the European Union refers to NASA R&D programmes  (for th e 
list of programmes, see European Union First Written Submission, at para. 1007 & ft 2020 thereto) and USDOD 
RDT&E programmes  (for the list of programmes, see Ibid., at para. 1007 & ft 2021 thereto) as having caused 
adverse effects through a technological  causal mechanism . Further, the European Union refers to the same 
NASA R&D programmes and USDOD RDT&E programmes  as causing adverse effects through a price causal 
mechanism . (See Ibid., at para. 1181).  
2 Appellate Body Report, European Communities and cert ain Member States – Measures  Affecting Trade 
in Large Civil Aircraft, WT/DS316/AB/R, adopted 1 June 2011, at para. 1232.  WT/DS353/RW/ Add.1  
 
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  20. First of all, it would contradict the Appellate Body's previous f inding that "proving de facto 
export contingency is a much more difficult task [than proving de jure export contingency]."3  
 
21. Second, the defining role of the baseline ratio in determining whether a subsidy is de facto  
export contingent would result in  substantial legal uncertainty as to whether or not a given subsidy 
is de facto  contingent upon exports. There is a risk that one and the same subsidy could be 
considered de facto  export -contingent if the baseline ratio is set in year/period X, whereas it may 
not be considered de facto  export -contingent if the baseline ratio is set in year/period Y.  
 
22. Third, the " anticipated export ratio " test for establishing de facto  export contingency may 
risk arbitrarily discriminating against WTO Members with small er domestic markets. WTO Members 
with small domestic markets, for whom changes in baseline ratios from one year or period to 
another may be more pronounced, may be more vulnerable to a finding of de facto  export 
contingency compared to WTO Members with lar ger domestic markets.  
 
V. IMPORTANCE OF THE EX ISTENCE OF A COMPETI TIVE RELATIONSHIP  
23. Regarding the fourth and last issue, Japan submits that an assessment of the existence of 
an actual competitive relationship between the subsidized product and the li ke product is crucial 
for the establishment of causality between the subsidies and " serious prejudice " under Articles 5(c) 
and 6 of the SCM Agreement . 
 
24. Japan notes that the European Union argues that subsidies maintained or granted by the 
United States  to Boeing cause adverse effects in the form of significant price suppression and 
significant lost sales of A330, A350 XWB family LCA, A320neo family LCA, and A320ceo family 
LCA, both in situations where a subsidized Boeing LCA " competes actively " with the  corresponding 
Airbus LCA, and where Boeing and Airbus LCAs " no longer actively compete for the same sales ." 
 
25. In Japan's opinion, the existence of an actual competitive relationship  between a subsidized 
product and a like product plays a crucial role i n the assessment of a causal link between the 
subsidies and serious prejudice.  
 
26. In both EC – Aircraft4 and US – Aircraft ,5 the Appellate Body noted that an assessment of 
the competitive relationship between products in the market is required in order t o determine 
whether and to what extent one product may displace another. In China – X-Ray Equipment6 and 
China – GOES ,7 the panel and the Appellate Body emphasized the importance of the existence of 
actual competition between two products for the purposes of assessing the effects of the imports 
of certain products on a like domestic product.  
 
                                               
3 Appellate Body Report, Canada – Measures Affecting the Export of Civilian Aircraft , WT/DS70/AB/R, 
adopted 20 August 1999, at para. 16 7.  
4 Appellate Body Report, European Communities and certain Member States – Measures Affecting Trade 
in Large Civil Aircraft , WT/DS316/AB/R, adopted 1 June 2011, at para.  1119.  
5 Appellate Body Report, United States – Measures Affecting Trade in Large Ci vil Aircraft (Second 
Complaint) ¸ WT/DS353/AB/R, adopted 23 March 2012, at para. 1071.   
6 See Panel Report, China – Definitive Anti -Dumping Duties On X -Ray Security Inspection Equipment 
from the European Union , WT/DS425/R, adopted 24 April 2013, at paras. 7.50, 7.88 & 7.92.  
7 See Appellate Body Report, China – Countervailing and Anti -Dumping Duties on Grain Oriented Flat -
Rolled Electrical Steel from the United States , WT/DS414/AB/R, adopted 16 N ovember 2012, at para. 226 & 
ft 375 thereto.  WT/DS353/RW/ Add.1  
 
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  ANNEX D -6 
EXECUTIVE SUMMARY OF  THE STATEMENT OF JAP AN 
AT THE PANEL MEETING  
Contains no BCI or HSBI  
I.  PURCHASE OF SERVICES – SCOPE OF ARTICLE 1.1(A)(1) OF THE SCM A GREEMENT  
1. In the context of the United States' claims that its post -2006 NASA procurement contracts1 
and certain DoD contracts2 should be properly characterized as purchases of services and as such 
do not constitute a financial contribution, Japan would like to express its views on the a priori  
exclusion of purchases of services from the scope of Article 1.1(a)(1) of the SCM Agreement . 
2. The Appellate Body explained that the structure of Article 1.1(a)(1) does not preclude a 
transaction from being covere d by more than one subparagraph;3 a transaction may fall under 
more than one type of  financial contribution and different aspects of a complex and multifaceted 
transaction may fall under different types of a financial contribution.4 
3. These observations i mply that, for the purposes of the SCM Agreement , a complex and 
multifaceted transaction may be properly characterized both as a purchase of services and, for 
example, as a direct transfer of funds . The a priori  exclusion of purchases of services would mea n 
that, so long as a complex and multifaceted transaction has a certain characteristic  of a purchase 
of services, it would be necessarily excluded from the scope of the SCM Agreement , regardless  of 
any other characteristic it may have.  
4. Should the Panel uphold the United States' argument that government purchases of services 
are a priori  excluded from the scope of the SCM Agreement , this will create an enormous loophole 
in the coverage of the SCM Agreement . It would also require the Panel to read into the  text of 
Article 1.1(a)(1) an exception it does not contain. Yet, if the drafters had specifically intended to 
exclude a certain subject matter from the scope of that provision, they would have done  so 
explicitly, as in the case of a government's provision  of general infrastructure. Next, given  their 
fragmentary nature,  travaux préparatoires  should be used with caution in the present case  to 
deduce the motivation for the  omission of purchases of services from Article 1.1(a)(1) . Further, 
the omission may be due to a precaution so as not to prejudge the outcomes of prospective 
negotiations on subsidies disciplines per Article XV of the GATS.  
5. For the above reasons, the a priori  exclusion of purchases of services from the scope of 
Article 1.1(a)(1) of the SCM Agreement  is incompatible with the Appellate Body's interpretation 
and textual analysis of that Article, and may risk opening a door for circumvention of the 
disciplines of the SCM Agreement . 
II. THE IMPORTANCE OF THE NATURE OF A SUBSIDY FOR THE CAUSATIO N ANALYSIS 
– AGGREGATION OF SUBSIDIES  
6. The Appellate Body has repeatedly stressed the importance of the nature of a subsidy for 
the causation analysis, including during the original proceeding in the context of the aggregation of 
                                               
1 See United State s First Written Submission, at paras. 222 –226, and United States Second Written 
Submission, at paras. 214 –225. 
2 See United States First Written Submission, at paras. 389 –390, 419 –424, 444 –445, 470 –471, and 
United States Second Written Submission, at paras . 366–382. 
3 Appellate Body Report, United States – Measures Affecting Trade in Large Civil Aircraft (Second 
Complaint) , WT/DS353/AB/R, adopted 23 March 2012 [ US – Aircraft ], at para. 613 and ft 1287 thereto. See 
also Appellate Body Reports, Canada – Certa in Measures Affecting the Renewable Energy Generation Sector  
and Canada – Measures Relating to the Feed -In Tariff Program , WT/DS412/AB/R and WT/DS426/AB/R, 
adopted 24 May 2013 [ Canada – Renewable Energy ], at para. 5.121.  
4 Appellate Body Reports, Canada – Renewable Energy , at para. 5.120.  WT/DS353/RW/ Add.1  
 
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  subsidies. Similarly, bo th the United States and the European Union support their respective 
causation analyses by referring to the nature of the impugned subsidies.5  
7. Japan emphasized in its Third Party Submission that the evaluation of the nature of a 
subsidy is key to deter mining whether the effect of a subsidy constitutes any of the market 
phenomena alleged under Article 6.3 of the SCM Agreement , and consequently whether a subsidy 
is actionable for the purposes of the SCM Agreement .6  
8. The Appellate Body's explanation of the aggregation approach reinforces the importance of 
the nature of a subsidy in the context of the causation analysis. The analytical framework 
suggested by the Appellate Body for consider ing the possibility of aggregating subsidies consists of 
a number o f sequential steps. First, a panel should assess the degree of similarity by examin ing 
the nature and design of the subsid ies at issue , the implications of that nature and design for the 
operation of the subsidies , their relationship to the subsidized prod uct, and the structure of the 
market in which that product competes . Next, a panel should assess whether there is a reasonable 
likelihood that the examination of the causal relationship between each subsidy and the alleged 
adverse effects will be largely s imilar and whether it can be anticipated that the effects of the 
subsidy measures and their causal relationship to the alleged serious prejudice will be largely the 
same.7 
9. This analytical approach elucidates a number of  important aspects of the causatio n analysis. 
First, the nature and design of a subsidy have important implications for the operation of a 
subsidy. Second, the effects of the subsidy measures and their causal relationship to the alleged 
serious prejudice are a function of the nature of a g iven subsidy. Third, the examination of the 
causal relationship between a subsidy and alleged adverse effects may be informed by the nature 
of a subsidy.  
10. Thus, the Appellate Body's approach to the issue of aggregation is in line with Japan's 
emphasis on the importance of the nature of a subsidy for the causation analysis.  
III. WITHDRAWAL OF A SUBSIDY AND REMOVAL OF ADVERSE EFFECTS  
11. Given the prospective nature of remedies under WTO law, Article 7.8 of the SCM Agreement  
requires that a Member that h as granted an actionable subsidy withdraw the remaining subsidy  
(cease to provide the subsidy at issue)  or remove the presently -existing adverse effects.  
12. The structure of the SCM Agreement  demonstrates that the existence of a benefit is crucial 
for the  ability of the subsidy to cause adverse effects. Hence, Article 7.8 of the SCM Agreement  
requires the Member granting a subsidy to "withdraw" it so as to no longer have the benefit 
conferred, or to remove the presently -existing adverse effect, for example , by removing the 
remaining benefit conferred by the subsidy . 
13. R&D subsidies, like any subsidy,  may result in enabling firms to lower production costs  
through the consumption of the "benefit" of subsidies . R&D subsidies thus have a price effect .  
14. In this proceeding, the United States argues that, even in the absence of inconsistent R&D 
subsidies, Boeing would still have successfully researched and developed all of the innovative 
technologies associated with the 787 and launched the 787 in 2006, no mo re than two years after 
its actual launch in 2004.8 This endorses Japan's view that the examination of R&D subsidies  under 
the SCM Agreement  should not focus on  the effects of the innovations and developed technologies 
they support . The focus should be on  a price effect  which makes it possible for the recipient to sell 
certain products at lower prices due to cost reductions.   
                                               
5 United States First Written Submission, at paras. 722 and 727 and European Union Second Written 
Submission, at paras. 1082 -1091.  
6 Japan Third Party Submission, at paras. 17 –24.  
7 Appellate Body Report, US – Aircraft , at para. 1291.  
8 United States First Written Submission, at paras. 705 , 709.  WT/DS353/RW/ Add.1  
 
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  IV. DE FACTO  EXPORT CONTINGENCY  
15. The European Union seeks to establish the de facto  export contingency of the United States' 
subsidies at issue on the basis of the " anticipated export ratio " test.9  
16. In EC – Aircraft, the Appellate Body explained that  the de facto export contingency " must be 
inferred from the total configuration of the facts constituting and surrounding the granti ng of the 
subsidy ", such as: (i) the design and structure of the measure granting the subsidy; (ii) the 
modalities of the operation set out in the measure; and (iii) the relevant factual circumstances 
surrounding the granting of the subsidy that provide th e context for understanding the measure's 
design, structure, and modalities of operation.10 Japan respectfully requests that the Panel pay 
particular attention to this part of the Appellate Body's finding.  
17. The European Union relies on certain statements  attributable to the United States or Boeing 
to establish that the subsidies are geared to induce or incentivize exports. Japan wishes to take 
this opportunity to caution the Panel against ascribing too much importance to these statements. 
First, statement s may be made due to a desire by government officials to appease their 
constituents. Secondly, to the extent that such statements are taken to demonstrate the policy 
objectives of the United States Government, their relevance for establishing the export 
contingency of the subsidies is limited, as de facto  export contingency must be determined by 
assessing the subsidy itself.11 
18. If the European Union contends that such statements demonstrate  export  contingency , as 
they actually  create an incentive for expo rt sales over domestic ones, 12 the European Union should 
corroborate it by providing evidence of the existence of such an incentive. Only then, to follow the 
logic of the European Union, can  these  statements be  treated as valid evidence for establishing de 
facto export contingency in this dispute.  
V. LOCAL CONTENT REQUIREMENTS – CLAIMS OF THE EUROPEAN UNION UNDER 
ARTICLE 3.1(B) OF THE SCM AGREEMENT  AND ARTICLE III:4 OF THE GATT  
19. The European Union submits that the United States grants subsidies continge nt upon, and 
maintains measures favouring the use of, domestic over imported goods in breach of Article 3.1(b) 
of the SCM Agreement  and Article III:4 of the GATT.13 Japan understands that these  claims are 
mainly based  on the fact that Boeing's development a nd production activities are located in the 
United States. Thus, Boeing will produce goods locally and will further utilize such goods in the 
manufacturing of Boeing LCA instead of importing substitute goods.  
20. Subsidies are normally provided to enterpri ses located and having their production facilities 
within the jurisdiction of the granting authority. Further, Article III:8 of the GATT, as confirmed in 
EC – Commercial Vessels , excludes " payment of subsidies exclusively to domestic producers " from 
the sc ope of Article III of the GATT.14 
21. Hence, the assumption that a factory is more likely to purchase domestic products because 
development and production facilities are located in the United States does not demonstrate that 
such a factory actually receives  subsidies inconsistent with Article 3.1(b) of the SCM Agreement  
and Article III:4 of the GATT.  
                                               
9 See European Union First Written Submission, at paras. 754 –756, and European Union Second Written 
Submission, at paras. 814 –817. 
10 Appellate Body Report, EC – Aircraft , at para.  1046. citing Appellate Body Report, Canada – Measures 
Affecting the Export of Civilian Aircraft , WT/DS70/AB/R, adopted 20 August 1999, at para. 167 .  
11 Appellate Body Report, EC – Aircraft , at para. 1051.  
12 European Union First Written Submission, at paras.757 –759, and European Union Second Written 
Submission, at paras. 818 –821. 
13 European Union First Written Submission, at Sections VI.B and VI.C, and European Union Second 
Written Submission, at Sections IV.B and IV.C.  
14 Panel Report, European Communities – Measures Affecting Trade in Commercial Vessels , 
WT/DS301/R, adopted 20 June 2005 [ EC – Commercial Vessels ], at para 7.68.  WT/DS353/RW/ Add.1  
 
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  ANNEX D -7 
EXECUTIVE SUMMARY OF  THE WRITTEN SUBMISSI ON  
OF THE REPUBLIC OF K OREA  
A. The Scope of Article  21.5 Proceedings  
1. The United States has objected in its submission to certain claims by the European Union, 
which, it argues, address issues that the European Union could have raised during the initial Panel 
proceeding, but chose not to. It appears that the U.S. objection is based on an expansive concept 
of "claim preclusion " that applies under U.S. domestic law.  
2. However, even U.S. legal experts concede that such expansive notions of claim preclusion 
are inappropriate under systems that do not allow a party broad freedom to amend its initial 
complaints i n light of the evidence obtained and arguments presented during the course of the 
proceeding.1 The WTO 's dispute  settlement procedures (which do not allow "amendments " to the 
Panel 's terms of reference to incorporate issues that were not addressed in the c omplaining party 's 
consultation and panel requests) do not appear to permit the flexibility that justifies the broad rule 
of claim preclusion applied in domestic U.S. law.   
3. Furthermore, the provisions of the DSU do not support the conclusion that broad  rules of 
claim preclusion should be applied in an Article  21.5 proceeding. Under Article  21.5, a panel may 
hear claims about "measures taken to comply with … recommendations and rulings…. " Once it is 
determined that a particular measure is an implementati on measure — i.e., that the measure has 
been taken to comply with the rulings and recommendations of the DSB — Article 21.5 imposes no 
limitations on the claims that may be brought.  
4. Of course, Article 17.14 of the DSU indicates that Appellate Body repo rts shall be 
"unconditionally accepted by the parties to the dispute " (unless the report is rejected by the DSB). 
Furthermore, Articles 16.4, 19.1, 21.1, 21.3, and 22.1 of the DSU can be read together as 
indicating that final reports by a panel that are no t appealed must be given the same effect.2 The 
Appellate Body has taken the position that this requirement of "unconditional acceptance " should 
be understood to preclude a party from re -litigating issues that were finally decided in an Appellate 
Body repor t (or unappealed panel report) in a past dispute.3  
5. One of the Appellate Body 's earlier decisions also suggested these provisions could be read 
to preclude a party from raising claims in an Article  21.5 proceeding that it could have raised 
earlier but c hose not to.4 However, the Appellate Body subsequently clarified that the restrictions it 
had previously identified did not apply to claims about a "measure taken to comply, " which it 
described as being, "in principle, a new and different measure. "5 Accord ing to the Appellate Body, 
claims that had not previously been raised could  be asserted against an implementing measure in 
an Article 21.5 proceeding "even where such a measure taken to comply incorporates components 
of the original measure that are unchan ged, but are not separable from other aspects of the 
measure taken to comply. " As a practical matter, then, the only claims barred in an Article 21.5 
proceeding are those that were already decided in the original proceeding.  
                                               
1 See, e.g., American Law Institute, RESTATEMENT (2D) OF JUDGMENTS , § 24, comment a.  
2 See. e.g., European Communities – Anti-Dumpin g Duties on Imports of Cotton -Type Bed Linen from 
India; Recourse to Article 21.5 of the DSU by India; Appellate Body Report, WT/DS141/AB/RW, 8 April 2003, 
para. 93.  
3 See, e.g., United States – Import Prohibition of Certain Shrimp and Shrimp Products; Rec ourse to 
Article 21.5 of the DSU by Malaysia; Appellate Body Report, WT/DS58/AB/RW, 22 October 2001, para. 97.  
4 See United States – Subsidies on Upland Cotton  –Recourse to Article 21.5 of the DSU by Brazil , 
Appellate Body Report, WT/DS267/AB/RW, 2 June 20 08, para. 211.  
5 See United States – Laws, Regulations and Methodology for Calculating Dumping Margins 
("Zeroing")  – Recourse to Article  21.5 of the DSU by the European Communities, Appellate Body Report, 
WT/DS294/AB/RW, 14 May 2009, para. 432.  WT/DS353/RW/ Add.1  
 
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  6. This interpretation is consi stent with the provisions on which the Appellate Body has relied. 
The requirement in Article 17.14 that the parties accept Appellate Body (and, by implication, 
panel) reports unconditionally can only extend as far as the report itself goes. Unconditional 
acceptance of a report obviously cannot bind the parties with respect to matters that were not 
actually decided in the report. Consequently, if the panel or Appellate Body addresses only certain 
aspects of an issue in their reports, the unconditional accept ance of the report can only apply to 
the aspects that the panel and Appellate Body actually did address. Parties are bound by their 
unconditional acceptance of the report only with respect to matters that were actually decided in 
the report. They cannot be  bound on matters that were not decided.  
B. The Requirements of the SCM Agreement  
1. Financial Contribution  
7. A subsidy exists under Article  1.1(a)(1) of the SCM Agreement only when there is a financial 
contribution involving one of the four categories l isted in that provision.6 It is not enough, 
therefore, for a complaining party to identify government actions that confer "benefits " on a 
recipient. As the Appellate Body has explained, a finding that there has been a government action 
and that the recipie nt has benefited from that action is not sufficient, because "the requirement of 
a financial contribution from the outset was intended by its proponents precisely to ensure that not 
all government measures that conferred benefits could be deemed to be subs idies. " 7  
8. In order to state a claim under the SCM Agreement, then, a complaining party must 
demonstrate that the government measure at issue fell within one of the categories of "financial 
contribution " identified in Article  1.1(a)(1). In analyzing suc h claims, a panel may, of course, look 
beyond the formal financial structure of a government action to its underlying substance. But, in 
the end, a transaction may be considered a subsidy only if it is substantively identical to 
government action that woul d fall within at least one of the listed categories of "financial 
contribution " in Article  1.1(a)(1). Transactions that do not fall within one or more of those 
categories are not subsidies under the SCM Agreement.  
9. We understand that the European Union a nd the United States disagree as to whether 
certain aspects of the contracts between the U.S. producer and U.S. government agencies 
constitute a "financial contribution. " In assessing those claims, the Panel may look beyond the 
form to the underlying econo mic substance of the transactions, to determine what, if anything, the 
government actually provided to the alleged recipient. But, once the Panel has determined the 
nature of the government action, it must measure that action against the classifications se t forth 
in Article  1.1(a)(1) of the SCM Agreement, to determine which, if any, of the classifications apply. 
If a challenged transaction does not fall under one of the categories of "financial contribution " 
defined in that provision, then it cannot be a su bsidy — no matter how much the transaction might 
have benefitted its recipient.  
2. Specificity  
10. The European Union has contended that favorable terms concerning intellectual property 
rights in certain government contracts for research and development sh ould be deemed to be de 
jure "specific, " within the meaning of Article  2.1(a) of the SCM Agreement, because the supported 
research is performed only by a limited number of enterprises.8 As a legal matter, however, the 
actual use of such provisions does not  determine whether they are de jure specific u nder 
Article  2.1(a). Instead, a finding of de jure specificity requires an assessment of whether there are 
"explicit " limitations on access  to the subsidy. Thus, Article 2.1(a) provides that "Where the 
granting  authority, or the legislation pursuant to which the granting authority operates, explicitly  
limits access to a subsidy to certain enterprises, such subsidy shall be specific. " If the term 
"explicit " in Article 2.1(a) is to be given meaning, then an "implicit" limitation that is not expressly 
                                               
6 Under Art icle 1.1(a)(2)  a subsidy may also exist when "there is any form of income or price support in 
the sense of Article  XVI of GATT  1994. "   
7 See United States – Final Countervailing Duty Determination with respect to Certain Softwood Lumber 
from Canada , Appel late Body Report, WT/DS257/AB/R, 19 January 2004, para. 52, n.35, quoting United States 
– Measures Treating Exports Restraints as Subsidies, Panel Report, WT/DS194/R, 29 June 2001, para. 8.65.  
8 See, e.g., First Written Submission of the European Union , paras. 192 to 193.  WT/DS353/RW/ Add.1  
 
- D-25 - 
 
  stated in the legislation or other granting authority cannot provide a basis for finding specificity 
under Article 2.1(a).  
11. The actual usage of a subsidy is, of course, a factor to be considered in analyzing whethe r 
the subsidy is de facto specific under the terms of Article  2.1(c). In analyzing that issue, the Panel 
needs to assess whether there is, in fact, evidence that the subsidy (as properly defined) is 
disproportionately used by certain enterprises or industr ies within the meaning of Article 2.1(c), 
taking into account the extent of diversification of economic activities within the jurisdiction of the 
granting authority, as well as of the length of time during which the subsidy program has been in 
operation .  
3. Benefit  
12. The European Union has contended that the "benefit " of certain alleged contributions (such 
as alleged contributions that take the form of intellectual property rights) may be many multiples 
of the underlying financial contribution.9 The basi s for that claim is not entirely clear.  
13. Ordinarily, the identification of a "benefit " under Articles 1.1(b) and 14 requires a 
comparison of the government "financial contribution " with the terms that would have been 
available in the absence of governm ent action.10 In other words, the benefit is measured by 
comparing the (1)  the cost incurred by the recipient to obtain the financing with the government 
support, and (2)  the cost the recipient would have incurred to obtain equivalent financing from the 
market, if there had been no government support. The use of the financing by the recipient has no 
impact on this calculation. Instead, because the subsidy consists of a financial contribution, the 
benefit of a subsidy is necessarily equal to the reduction of financing costs caused by the 
government action.  
14. As a conceptual matter, it might theoretically be possible to define "benefit " in a different 
manner, based on the returns to the recipient on the use of the financial contribution. Under such 
a theory, a financial contribution that was used to finance investments that had no returns would 
have no "benefit. " By contrast, a financial contribution that was used to finance investments with 
large returns would have a large "benefit. "  
15. Such an approach doe s not appear to have any textual support in the provisions of the SCM 
Agreement or in the past decisions by panels or the Appellate Body. Furthermore, it is Korea 's 
understanding that the general practice followed by national investigating authorities in 
countervailing duty cases does not accept such an approach. Before accepting such a theory, the 
Panel should, at a minimum, require that its proponents demonstrate how it would be consistent 
with the relevant provisions of the SCM Agreement, as interpreted in accordance with the 
customary rules of treaty interpretation.  
4. Adverse Effects  
16. In its first submission, the European Union contends that the "adverse effects " of the U.S. 
subsidies can be felt through two mechanisms: (1)  a technological mechanism,  and (2)  a price 
mechanism. It appears that the United States has accepted this two -pronged analysis. It is 
understandable, then, that the Panel and Appellate Body have considered effects through both 
mechanisms.11 Nevertheless, the proposed technological m echanism is difficult to reconcile with 
the structure of the SCM Agreement and its definition of subsidies. It is doubtful, therefore, that 
such an analysis can properly be extended to other situations in which the parties have not 
accepted its use.  
                                               
9 See, e.g., First Written Submission of the European Union, para. 191.  
10 See, e.g, Canada – Measures Affecting the Export of Civilian Aircraft, Appellate Body Report, 
WT/DS70/AB/R, 2 August 1999, para. 157.  
11 See United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint) , Appellate 
Body Report, WT/DS353/AB/R, 12 March 2012, para. 1018.  WT/DS353/RW/ Add.1  
 
- D-26 - 
  17. Money obtained through improper subsidies can be repaid or else offset through taxes or 
other levies.12 As a result, the financial effects of a subsidy are quantifiable and remediable. The 
alleged technological effects are not. The assessment of adverse effec ts through a technological 
mechanism should, therefore, be carefully circumscribed, if not entirely rejected.  
                                               
12 In this regard, it is Korea 's view that the "withdrawal " of subsidies described in Article 7.8 of the SCM 
Agreement occurs when t he government in question ceases to give any additional subsidies. Notwithstanding 
the panel decision in the Article  21.5 proceeding in Australia – Leather , Korea does not believe that the concept 
of "withdrawal " imposes an obligation to have the recipient  repay the amount of subsidies received in the past.  
See Australia – Subsidies Provided to Producers and Exporters of Automotiv e Leather – Recourse to 
Article  21.5 of the DSU by the United States, Panel Report, WT/DS126/RW, 21 January 2000, paras. 6.18 to  
6.49.  WT/DS353/RW/ Add.1  
 
- D-27 - 
 
  ANNEX D -8 
EXECUTIVE SUMMARY OF  THE STATEMENT OF THE  REPUBLIC OF KOREA  
AT THE PANEL MEETING  
1. The Republic of Korea ("Korea ") would like to brief ly offer the following observations with 
respect to two systemic points : the first , concerning the scope of Article 21.5 proceedings ; and the 
second , concerning the requirement s of the SCM Agreement.  
2. To begin with, Korea would like to reiterate its position with respect to the scope of 
Article  21.5 proceedings  as stated in the 3rd party session in the EC – Airbus  dispute held last 
April. In Korea 's view, the issue of a compliance panel 's terms of reference has a close bearing  
with the enforceability of the WTO Agreements.  
3. If a compliance panel 's terms of reference are overly broad, it may open a back door for 
measures, which could and should have been included in the original panel proceeding (but were 
excluded by a complainant), to come to a complia nce proceeding. On the other hand, should a 
compliance panel 's terms of reference be overly narrow , an implementing Member may attempt to 
introduce a new measure which share s the characteristics of the impugned  measure in all material 
respects, thereby eff ectively avoiding its obligation to comply with the recommendations and 
rulings of the DSB. A balance should be struck between the two competing considerations.  
4. In determining the scope of terms of reference of the present proceeding, therefore, this 
Panel should carefully examine and apply the WTO jurisprudence on this issue. In Korea 's view, 
the WTO jurisprudence to date  offers important guidelines in this regard.  
5. As the Panel is aware, Article 21.5 of the DSU applies "where there is disagreement as to 
the existence or consistency with a covered  agreement of measures taken to comply with the 
recommendations and rulings. " Consequently, a complaining party  is not permitted in an 
Article  21.5 proceeding to challenge other measures that were not "taken  to comply with … 
recommendations and rulings " from the initial panel and Appellate Body proceedings in the same  
dispute. It follows that once it is determined that a particular measure is an implementation 
measure, that measure is within the terms of refe rence of an Article 21.5 panel.  
6. This interpretation is supported by other provisions of the DSU. As Korea stated in its 
written submission, Article 17.14 of the DSU indicates that Appellate Body reports shall be 
"unconditionally accepted by the parties to the dispute " unless the report is rejected by the DSB. 
Furthermore , Articles 16.4, 19.1, 21.1, 21.3, and 22.1 of the DSU can be read together as 
indicating that final reports by a panel that are not appealed must be given the same effect that 
Article 17 .14 mandates for final reports by the Appellate Body.1 This requirement of "unconditional 
acceptance " should be understood to preclude a party from re -litigating issues that were finally 
decided in an Appellate Body (or unappealed panel ) report in a past d ispute.2 
7. This prohibition does not extend, however, to issues that were not finally decided in the 
Appellate Body (or unappealed panel) report. Indeed, t he Appellate Body in United States – 
Zeroing  (DS294) clarified that claims that had not previously b een raised could nevertheless be 
asserted against an implementing measure in an Article 21.5 proceeding "even where such a 
measure taken to comply incorporates components of the original measure that are unchanged, 
but are not separable from other aspects of the measure taken to comply. "3 
                                               
1 European Communities – Anti-Dumping Duties on Imports of Cotton -Type Bed Linen from India; 
Recourse to Article 21.5 of the DSU by India;  Appellate Body Report, WT/DS141/AB /RW, 8 April 2003, 
para. 93. 
2 See, e.g., United States – Import prohibition  of Certain Shrimp and Shrimp Products; Recourse to 
Article 21.5 of the DSU by Malaysia;  Appellate Body Report, WT/DS58/AB/RW, 22 October 2001, para. 97.  
3 See United States – Laws, Regulations and Methodology for Calculating Dumping Margins ( "Zeroing ") 
– Recourse to Article 21.5 of the DSU by the European Communities , Appellate Body Report, 
WT/DS294/AB/RW, 14 May 2009, para. 432.  WT/DS353/RW/ Add.1  
 
- D-28 - 
  8. In short, i f the panel or Appellate Body addresses only certain aspects of an issue in their 
reports, the unconditional acceptance of the report can only apply to the aspects that the panel 
and Appellate Body actually d id address. Parties are bound by their unconditional acceptance of 
the report only with respect to matters that were actually decided in the report. They cannot be 
bound on matters that were not decided.  
Financial Contribution  
9. The n ext issue Korea woul d address concerns  the requirements of the SCM Agreement. As 
Korea indicated in its 3rd party submission, the SCM Agreement does not prohibit all forms of 
governmental support to industries. Instead, only certain types of support that are specifically 
defined and categorized by the Agreement are regulated. It follows that the agreement must not 
be read too broadly . According to the negotiating history, a finding that there has been a 
government action and that the recipient has benefited from that action is  not sufficient, because 
"the requirement of a financial contribution from the outset was intended by its proponents 
precisely to ensure that not all government measures that conferred benefits could be deemed to 
be subsidies. "4  
10. Korea understands that  the European Union and the United States disagree as to whether 
certain  aspects of the contracts between the US producer and US government  agencies constitute 
a "financial contribution. " In assessing those claims, the Panel may look beyond the form to the  
underlying economic substance of the transactions, to determine what, if any, the government  
actually provided to the alleged recipient through the transactions at issue. But, o nce the Panel 
determines the nature  of the government action at issue, it must  measure that action against the 
classifications set forth in Article 1.1(a)(1) of the SCM Agreement, to determine which, if any, of 
the four classification s of the provision apply. Theoretically speaking, if none of the four 
enumerated  categories apply to  the transaction at issue, an argument can be made that the 
transaction does not constitute the financial contribution under Article 1.1(a)(1) of the SCM 
Agreement.  
Specificity  
11. The European Union has contended that favorable terms concerning intellectu al property 
rights in certain government contracts for research and development should be deemed to be de 
jure "specific " within the meaning of Article 2.1(a) of the SCM Agreement, because the supported 
research is performed only by a limited number of ent erprises.5 As a legal matter, however, the 
actual use of such provisions does not determine whether they are de jure  specific under 
Article  2.1(a). Instead, a finding of de jure  specificity  requires an assessment of whether  there are 
"explicit " statutory o r regulatory limitations on access  to the subsidy. A subsidy that is open to all 
comers – regardless of their past experience or practical capabilities – is not de jure  specific, even 
if, in practice, only established producers in a particular  industry act ually choose to apply. It 
should be noted that the concept of de jure  specificity only looks at the statutory or regulatory 
scheme to see if it imposes explicit limitations on access to a governmental program at issue, as 
opposed to the actual utilization of the program by enterprises or industries.  
12. Of course, t he actual usage of a subsidy may be a factor to be considered in analyzing 
whether the subsidy is de facto  specific under Article 2.1(c). In finding de facto  specific ity, the 
Panel must assess wh ether there is, in fact, evidence that the subsidy is disproportionately used 
by certain enterprises or industries within the meaning of Article 2.1(c). The Agreement also 
requires the Panel to take into account the extent of diversification of economic ac tivities within 
the jurisdiction of the granting authority, as well as of the length of time during which the subsidy 
program has been in operation.  
                                               
4 United States – Final Countervailing Duty Determination with respect to Certain Softwood Lumber from 
Canada , Appellate Body Re port, WT/DS257/AB/R, 19 January 2004, para. 52, n.35, quoting United States – 
Measures Treating Exports Restraints as Subsidies , Panel Report, WT/DS194/R, 29 June 2001, para. 8.65.  
5 See, e.g. , First Written Submission of the European Union, paras. 192 -193. WT/DS353/RW/ Add.1  
 
- D-29 - 
 
  Benefit  
13. The European Union has contended that the "benefit " of certain alleged contributions (such 
as alleged contributions that take the form of intellectual property rights) may be many multiples 
of the underlying financial contribution.6 In Korea 's view, the basis for that claim is not entirely 
clear. Normally, the benefit is measured by comparing (1) th e cost incurred by the recipient to 
obtain the financing with the government support , and (2) the cost the recipient would have 
incurred to obtain equivalent financing from the market, in the absence of such government 
support. The utilization of the finan cing by the recipient and the ultimate situation or end products 
as a result of such utilization have no bearing on this calculation of benefit in accordance with 
Article 14 of the SCM Agreement which  should be equally applicable to the dispute at issue. I n 
fact, Article 14 of the SCM Agreement repudiates such an expansive application of the concept of 
benefit. Any benefit conferred by a subsidy should necessarily be equal to the reduction of 
financing costs caused by the government action.  
14. In a sense,  the EU 's "multiple benefit " theory appears to require that financial contributions 
that are somehow wasted confer no benefit, while financial contributions that happen to generate 
outsized returns confer a benefit that is multiple times the amount of the actual financial 
contribution. This approach is premised upon the notion that benefit is an elastic concept which 
can only be determined by the ultimate outcome or performance of the recipient. Under this 
approach, the final value of the benefit will fluctuate over time depending on how the recipient of 
the subsidy will fare in the market. In Korea 's view, nowhere in the SCM Agreement can one find a 
legal basis to support such an approach.  
Adverse Effects  
15. The European Union contends that the "adverse ef fects" of the US subsidies can be felt 
through two mechanisms: (1) a technological mechanism, and (2) a price mechanism. In Korea 's 
view, however, the proposed technological mechanism seems to be difficult to reconcile with the 
structure of the SCM Agreeme nt and its definition of subsidies. It is doubtful, therefore, whether 
such an approach can properly be extended to situations in which the parties have not accepted its 
use.  
16. In this connection, Korea would like to offer two observations . First, becau se the essence of 
a subsidy is the extra money the recipient obtains, the effects of the subsidy must , in Korea 's 
view, be measured by the effects of that money. The only direct effect of the provision of money 
to a recipient  at a lower -than-market cost is  a reduction in the recipient 's overall cost of financing. 
Because money is fungible, a company may take funds received for a specific purpose and instead 
apply them to a different use, while using funds from other sources to accomplish the purpose for 
which the subsidy was ostensibly granted. In short, the fact that a subsidy is ostensibly "tied" to a 
particular investment does not necessarily mean that the subsidy actually caused an investment 
that would not otherwise have occurred.  
17. Second, under the  SCM Agreement 's definition, a subsidy must lead to the recipient 
obtaining financing on better terms than it would have in the absence of the subsidy. The financial 
effects of a subsidy are quantifiable and remediable in that regard. However, the alleged 
technological effects are not. The assessment of adverse effects through a technological 
mechanism should, therefore, be carefully circumscribed, if not entirely rejected. Because 
subsidies are defined by the existence of a financial contribution, the only  effects that ordinarily 
would be cognizable under the SCM Agreement are the effects of whatever financial advantage the 
subsidy confers.  
 
_______________  
 
                                               
6 See, e.g. , First Written Submission of the European Union, para. 191.  WT/DS353/RW/ Add.1  
 
- E-1 - 
 
 ANNEX E  
RULINGS OF THE PANEL  REGARDING ARTICLE 13  OF THE DSU  
Contents  Page  
Annex E -1 Preliminary r ulings and decision regarding information -gathering under 
Article  13 of the DSU dated 26 November 2012  E-2 
Annex E -2 Communication of the Panel dated 5 December 2012  E-14 
Annex E -3 Communication of the Panel dated 18 December 2012  E-15 
Annex E -4 Communi cation regarding third party rights dated 25 January 2013  E-17 
 
 WT/DS353/RW/ Add.1  
 
- E-2 - 
 
 ANNEX E -1 
PRELIMINARY RULINGS AND DECISION REGARDI NG INFORMATION -GATHERING UNDER  
ARTICLE  13 OF THE DSU DATED 26 NOVEMBER 2012  
 
 
Introductory considerations  
 
1. In a submission dated 31 Oct ober 2012, the European Union makes two requests.1 First, it 
asks us to make a series of rulings regarding the interpretation of provisions relating to the 
initiation of procedures under Annex V of the Agreement on Subsidies and Countervailing Measures 
("ASCM"), their applicability to this dispute and certain consequences it considers to arise 
therefrom.2 Second, and in light of its observations regarding Annex V, the European Union asks 
us to seek information under Article 13 of the Understanding on the Ru les and Procedures 
Governing the Settlement Disputes ("DSU") by posing to the United States questions that the 
European Union had prepared for submission under Annex V.  
2. In a submission dated 8 November 2012, the United States disputes the European Union 's 
interpretation of the relevant provisions relating to the initiation of Annex V procedures, and asks 
the Panel to reject the EU's requests for rulings regarding the initiation of procedures under 
Annex  V.3 While the United States agrees with the Europea n Union that there are "unique reasons" 
that would justify us to seek information from the parties at an early point in these proceedings, it 
disagrees with the European Union regarding the timing, manner and extent to which we should 
exercise our authorit y to seek information pursuant to Article  13.4 
3. We note that the EU's request for rulings regarding Annex  V and its request that we seek 
information under Article 13 are distinct matters. However, the EU's request for an early exercise 
by the Panel of it s authority under Article 13, and its positions regarding the manner in which that 
authority should be exercised, are premised on the view that it was entitled to an Annex V 
procedure in this case. Further, the United States agrees that the EU's request fo r rulings 
addresses issues critical to the information -gathering process and requests the Panel to resolve 
them before making any request under Article 13.5 We agree that clarity on certain matters 
relating to Annex V may inform our consideration of the po ssible exercise of our authority under 
Article 13. Accordingly, we turn first to the EU's request for rulings regarding Annex V.  
Request for rulings regarding Annex V  
 
4. By way of background, we note that the EU requested that the Dispute Settlement Body  
("DSB") establish a panel in this proceeding pursuant, inter alia,  to Article 7.4 of the ASCM  and 
Article 21.5 of the DSU.6 The United States did not seek to block establishment of a panel, but 
stated its view that the panel was being established only und er Article  21.5. As a separate sub -
item of the agenda, the EU also requested that the DSB initiate an Annex V procedure, which it 
considered to be automatic. The US responded that the Panel was established under Article  21.5 
DSU only and that an Annex V pr ocedure was provided for only where a panel is established under 
Article  7.4 ASCM.  The DSB took note of the statements made.  
5. The European Union subsequently sent a letter to the DSB Chair, contending that the 
conditions for initiation of an Annex  V proc edure had been fulfilled, initiation had thus occurred and 
an Annex V procedure was currently running, and that the Chair was responsible for discharging 
the function of Facilitator. It requested the Chair to forward its Annex V questions to the 
United  States and to third Members, and to establish working procedures, including a timetable, as 
                                               
1 European Union, Request for a Preliminary Ruling and Request for the Panel to exercise its Authority 
Pursuant to Article 13 of the DSU, dated 31 October 2012 ("EU Request" or "Requ est").  
2 EU Request, paras. 12 -23. 
3 Reply of the United States to the EU Request for a Preliminary Ruling and the EU Request for the Panel 
to Request Information under Article 13 of the DSU, dated 8 November 2012 (US Reply" or "Reply").  
4 US Reply, para. 40. 
5 US Reply, para. 5.  
6 WT/DS353/18, para. 3.    WT/DS353/RW/ Add.1  
 
- E-3 - 
 
 well as procedures for the protection of confidential information.7 The United States responded 
that no Annex  V procedure had been initiated, that the Chair could not act as Facilitator in a 
procedure that did not exist, and that he should therefore deny the EU's request.8 After further 
exchanges of views,9 the Chair informed the delegations that there were significant differences of 
view between them on complex legal q uestions, that it would not be appropriate for him to 
interpret the covered agreements in order to resolve intricate legal issues unilaterally, and that it 
would not be appropriate, absent legal clarity on these issues, to take actions requested by the 
European  Union.10  
6. Two days after the DSB Chairman's response, the EU submitted its request to this Panel. In 
its Request, the European Union asks us to "rule or confirm" as follows:  
 The correct interpretation of the relevant provisions and particularly Art icle 7.4 and Annex  V, 
paragraph 2 of the SCM Agreement  is that set out in this submission and in paragraphs 508 -
533 of the Appellate Body Report in  United States – Measures Affecting Trade in Large Civil 
Aircraft (Second Complaint) : the DSB's initiation of  an information -gathering procedure in a 
serious prejudice dispute occurs automatically provided that a request for such a procedure 
has been made and a panel established pursuant to Article  7.4 of the SCM Agreement . 
 
 In compliance proceedings, the legal a nalysis leads to the same conclusion.  
 
 In this case the Panel was established pursuant, inter alia , to Article  7.4 of the SCM 
Agreement  and a request for an Annex V procedure was made.  
 
 Consequently, the two conditions provided for were met, and automatic initiation occurred, 
or is deemed to have occurred, or should have occurred.  
 
 In any event, through its actions at the DSB meeting on 23 October 2012 and in particular 
its subsequent actions and inactions in relation to the Annex V procedure initiated on 
23 October 2012, the United States has failed to comply with its obligations under Annex V 
of the SCM Agreement , and in particular has failed to cooperate in the development of 
evidence to be examined by a panel in procedures under paragraph 4 through 6 of Article  7, 
as required by paragraph 1 of Annex V.  
 
 The European Union is entitled to present its case based on the evidence available to it, 
pursuant to paragraph 6 of Annex V.  
 
 This Panel may complete the record as necessary relying on best information av ailable.  
 
 In making its determination, this Panel should draw adverse inferences from the non -
cooperation of the United States.  
 
 That ordinarily this Panel should not request additional information from the United States to 
complete the record where the in formation would support the position of the United  States 
and the absence of that information in the record is the result of the unreasonable failure of 
the United States to co -operate in the Annex V procedure.11  
 
7. With respect to the European Union requ est that we "rule or confirm" on the "correct 
interpretation" of Article 7.4 and Annex V, we note that the United States submits that "….the 
United States and the EU are in agreement that initiation of an Annex V procedure is mandatory if 
a party requests the procedure and the DSB establishes a panel pursuant to Article 7.4."12 Indeed, 
nowhere in its submission does the United  States suggest that initiation of an Annex V procedure 
does not occur automatically where these conditions are met. In any event, we note the Appellate 
                                               
7 Letter of the European Union to the Chairman of the DSB, dated 23 October 2012 (Exhibit EU -3). 
8 Letter of the United States to the Chairman of the DSB, dated 24 October 2012 (Exhibit EU -4). 
9 See Exhib its EU -5, EU -6 and EU -7. 
10 Letter from the Chairman of the DSB, dated 29 October 2012 (Exhibit EU -8) 
11 EU Request, para. 22.  
12 US Reply, para. 16. See also  footnote 3 ("In the original proceedings, the United States took the 
view…that initiation of an Anne x V procedure in tandem with establishment of a panel under Article 7.4 of the 
SCM Agreement required positive consensus of the DSB, and that a Member could block that positive 
consensus…. That is not the position the United States advances in this proceed ing.")       WT/DS353/RW/ Add.1  
 
- E-4 - 
 
 Body's ruling in the original proceedings in this dispute that "…. the first sentence of paragraph 2 
to Annex V of the SCM Agreement must be understood as requiring the DSB to take action, and 
that such action occurs automatically when t here is a request for initiation of an Annex V 
procedure and the DSB establishes a panel."13 The plain meaning could hardly be clearer and, that 
being so, there is no need for this Panel to issue any further ruling or "confirmation" on this 
question, not le ast because it would be redundant.  
8. The European Union further requests that we rule that (a) in compliance proceedings, the 
legal analysis leads to the same conclusion; (b) in this case the Panel was established pursuant, 
inter alia , to Article  7.4 of t he SCM Agreement and a request for an Annex V procedure was made; 
and (c) consequently, the two conditions provided for were met, and automatic initiation occurred, 
or is deemed to have occurred, or should have occurred.  
9. These three requests go to the h eart of the matter before us. The European Union considers 
that compliance panels involving serious prejudice claims are established inter alia pursuant to 
Article  7.4 of the ASCM, and that therefore an Annex V procedure is initiated automatically in such 
proceedings where a request for initiation is made and a panel is established.14 The United States 
by contrast considers that compliance panels are established pursuant to Article 21.5 of the DSU, 
and not pursuant to Article 7.4 of the ASCM; because in its view Annex V procedures may be 
initiated only where a panel is established pursuant to Article 7.4, no Annex V procedure is 
available in compliance panels.15 
10. Thus, the crux of the question before us is whether Annex V procedures are available in 
complia nce panels involving serious prejudice claims. This question is one facet of a broader issue 
that has confronted the Membership since the WTO's dispute settlement mechanism was created: 
how and to what extent do the dispute settlement procedures relating t o "original" proceedings 
apply in the context of compliance proceedings? For example, Members have disagreed as to 
whether there is an obligation to request and hold consultations prior to requesting a compliance 
panel,16 whether a Member is entitled to blo ck the establishment of a compliance panel at the first 
meeting of the DSB, and whether compliance panels are expected to make recommendations.17  
11. As a preliminary matter, we note that whether Annex V procedures are available in 
compliance panels is an issue of first impression. While the Appellate Body provided extensive 
guidance regarding the initiation of Annex V procedures in the original proceedings in this dispute, 
it did not specifically address the issue of compliance proceedings, nor does its di scussion provide 
clear guidance by implication.18 The Appellate Body at some points indicates that an Annex V 
procedure occurs "…when there is a request for initiation of an Annex V procedure and the DSB 
establishes a panel…."19 At other points, however, it emphasizes that one of the conditions for 
initiation of an Annex V procedure is that the matter be referred to the DSB under Article 7.4 of 
the ASCM.20 Given that the Appellate Body has not expressed a view on the legal basis for the 
establishment of compli ance panels, whether relating to serious prejudice claims or otherwise, we 
cannot rely on express guidance from the Appellate Body Report in that case to resolve the issue 
at hand.     
12. The parties to this dispute seem to have a shared view that whether  or not Annex V applies 
in the context of compliance panels depends upon whether or not such panels are established, 
inter alia , under Article 7.4 of the ASCM. This in turn relates to the broader question whether 
compliance panels are established pursuant to Article 21.5 of the DSU, or pursuant to the 
provisions relevant to panel establishment in original proceedings for the claim at issue (whether 
that be Article 7.4 for adverse effects claims under Part III of the ASCM, Article 4.4 of the ASCM 
for prohibi ted subsidy claims under Part II of the ASCM, or Article 6.1 of the DSU for other claims 
arising under the covered agreements). We note however that the issue before us is limited to 
                                               
13 Appellate Body Report, US – Large Civil Aircraft (2d Complaint) , para. 524 (footnote omitted).  
14 EU Request, para. 20.  
15 US Reply, paras. 17 -18. 
16 Appellate Body Report, Mexico – Corn Syrup (Article 21.5 - US), para. 52.  
17 Panel Report, US – FSC (Article 21.5 - EC II) , para. 7.39; Appellate Body Report, US – FSC 
(Article  21.5 - EC II), paras. 88 -89. 
18 Appellate Body Report, US – Large Civil Aircraft  (2d Complaint) , paras. 512, 524.  
19 Appellate Body Report, US – Large Civil Aircraft (2d Compla int), para. 524.  
20 US-Large Civil Aircraft , para. 511.  WT/DS353/RW/ Add.1  
 
- E-5 - 
 
 whether Annex V is available in compliance proceedings, and we will not r ule on the broader issue 
unless it is necessary to the resolution of the issue at hand.  
13. Our starting point is Annex V itself, which is identified in Appendix 2 to the DSU as a special 
or additional rule or procedure contained in the covered agreements.  Paragraph 1 of Annex V 
provides that "[e]very Member shall cooperate in the development of evidence to be examined by 
a panel in procedures under paragraphs 4 through 6 of Article 7." Paragraph 2 provides that, [i]n 
cases where matters are referred to the  DSB under paragraph 4 of Article 7, the DSB shall, upon 
request, initiate the procedure to obtain such information…." Finally, paragraph 5 provides that 
"[t]he information gathering process outlined in paragraphs 2 through 4 shall be completed within 
60 days of the date on which the matter has been referred to the DSB under paragraph 4 of 
Article  7." Thus, Annex V at three separate points makes reference to panels under Article 7.4.  
14. Neither Article 7.4 of the ASCM itself, nor Article 7 more generally, refers to Annex V. 
However, Article 6 of the ASCM, relating to serious prejudice, refers to Annex V in two paragraphs. 
Article 6.8 indicates that " {i}n the absence of circumstances referred to in paragraph 7, the 
existence of serious prejudice should be de termined on the basis of the information submitted to 
or obtained by the panel, including information submitted in accordance with the provisions of 
Annex  V." Perhaps more relevantly, Article 6.6 provides that " {e}ach Member …  shall, subject to 
the provisi ons of paragraph 3 of Annex V, make available to parties to a dispute arising under 
Article  7, and to the panel established pursuant to paragraph 4 of Article 7, all relevant 
information…." Article  6.6 of the ASCM  is also identified in Appendix 2 to the DS U as a special or 
additional rule or procedure.  
15. The plain reading of these provisions is that Annex V is available in the context of disputes 
involving serious prejudice claims under Article 7 of the ASCM, and more specifically in the context 
of panels  established pursuant to Article 7.4 of that Agreement. Thus, it would appear evident that 
an Annex V procedure would not be available in a panel relating exclusively to prohibited subsidy 
claims and established pursuant to Article 4.4 of the ASCM, nor in a panel relating to a 
countervailing measure and established pursuant to Article 6.1 of the DSU, nor indeed to panels 
relating to claims under other covered agreements and established pursuant to Article 6.1 of the 
DSU. That Annex V specifies this limitati on is not surprising given that, as previously noted, 
Article  7 itself makes no reference to Annex V. Consistent with this understanding, no Member has 
sought initiation of an Annex V procedure where no serious prejudice claim was being pursued.   
16. The United States contends in effect that the references to Article 7.4 cited above not only 
preclude the use of Annex V outside the context of serious prejudice claims but also preclude the 
application of Annex V in compliance panels even where they do relate  to serious prejudice claims. 
However, we do not believe that any conclusion regarding the availability of Annex V procedures in 
the latter context can be made without reference to the provisions of the WTO Agreement 
specifically addressing compliance proc eedings. Given that there is no specific reference to 
compliance proceedings in Article 7 of the ASCM (nor indeed anywhere else in the ASCM), we turn 
to the relevant provision of the DSU, Article 21.5, with a view to obtaining further clarity on this 
matte r. 
17. Article 21.5 of the DSU provides as follows:  
Where there is disagreement as to the existence or consistency with a covered 
agreement of measures taken to comply with the recommendations and rulings such 
dispute shall be decided through recourse to t hese dispute settlement procedures, 
including wherever possible resort to the original panel.  The panel shall circulate its 
report within 90 days after the date of referral of the matter to it. When the panel 
considers that it cannot provide its report wit hin this time frame, it shall inform the 
DSB in writing of the reasons for the delay together with an estimate of the period 
within which it will submit its report.(emphasis added).  
18. Article 21.5 indicates that disputes regarding compliance "shall be de cided through recourse 
to these dispute settlement procedures". In our view, "these dispute settlement procedures" in 
their ordinary meaning would appear to be a reference to the procedures provided for in the DSU, 
including of course any particularities d erived explicitly or implicitly from Article 21.5, as well as, WT/DS353/RW/ Add.1  
 
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 through the operation of Appendix 2 to the DSU, those special and additional rules and procedures 
found in other WTO agreements.  
19. This language therefore suggests that procedures applicable to "regular" or "original" panel 
proceedings are relevant in compliance panel proceedings, to the extent that this would not be 
inconsistent with the specific requirements of Article 21.5 or the nature of and function of 
compliance panels. We note in this respect the specific rules set forth in Article 21.5 - concerning 
the task of compliance panels, the preference for the original panellists, the shortened time frames 
- are among the "dispute settlement procedures" applicable in compliance proceedings. As stated 
by the Appellate Body, these three aspects are "key differences" between compliance panel 
proceedings and "regular" panel proceedings.21 However, there may well be other procedures 
applicable in "original" panel proceedings that are inconsistent with  the specific rules of 
Article  21.5 or the nature and function of compliance proceedings and thus do not apply in 
compliance panel proceedings.    
20. This understanding of Article 21.5 is consistent with Appellate Body jurisprudence. Thus, the 
Appellate B ody has found that "the phrase 'these dispute settlement procedures' [in Article 21.5] 
does encompass Article 6.2 of the DSU, and that Article 6.2 is generally applicable to panel 
requests under Article 21.5", while cautioning that "given that Article 21.5  deals with compliance 
proceedings, Article 6.2 needs to be interpreted in light of Article 21.5."22 Similarly, the Appellate 
Body has found that Article 10.3 of the DSU, regarding third party access to submissions of the 
parties, required third party acces s to rebuttal submissions in a compliance panel involving one 
meeting.23 
21. We also note that the parties and the adjudicators have often simply proceeded on the basis 
that various provisions of the DSU or special or additional rules and procedures applica ble to 
"original" panel proceedings apply in the compliance context. In these compliance panel 
proceedings, for example, both parties have proceeded on the basis that Article 13 regarding 
requests for information is applicable. Similarly, Members have freq uently based appeals, and the 
Appellate body has repeatedly relied upon, Article 11 of the DSU in compliance proceedings. 24 
Another notable example is Article 17 of the DSU regarding appellate review. That the Appellate 
Body has frequently heard appeals in  compliance proceedings implies that Article 17 is one of 
"these dispute settlement procedures" applicable in the compliance context.                     
22. Despite these precedents, the United States, citing the Appellate Body Report in US – 
Continued Su spension , appears to suggest that "these dispute settlement procedures" means the 
procedures in Article 21.5, operating in isolation, such that other provisions of the DSU are 
inapplicable in compliance proceedings. To the extent this is the US position, w e do not consider 
the United  States to have correctly understood the Appellate Body's ruling in that case. In US – 
Continued Suspension , the issue was not the extent to which dispute settlement provisions other 
than Article 21.5 apply in compliance proceed ings. Rather, the question was whether a Member 
could resort to a normal panel procedure -- i.e., one to which the rules and procedure in 
Article  21.5 did not apply -- when examining a disagreement about the existence or consistency of 
measures taken to co mply with the recommendations and rulings of the DSB. The Appellate Body, 
in ruling that " 'these dispute settlement procedures' do not refer generally to all proceedings 
under the DSU, but specifically to the panel proceedings envisaged in Article 21.5…."  was clarifying 
that a Member could not bypass the requirements of Article 21.5 in a case relating to compliance; 
it was not expressing a view on the extent to which other DSU provisions applied to such 
compliance proceedings.25 
23. We recall that the issue  before us in this case is limited to whether Annex V procedures are 
available in compliance panels. We note that nothing in Article 21.5 on its face suggests that 
Annex  V does not or should not apply in the compliance context.  
                                               
21 Appellate Body Report, US – Softwood Lumber IV (Article 21.5 - Canada) , para. 71.  
22 Appellate Body Report, US – FSC (Article 21.5 - EC II) , para. 59.     
23 Appellate Body Report, US – FSC (Article 21 .5 - EC), paras. 232 -252. The Appellate Body reversed 
the Panel's ruling that "[w]e do not consider that Article 10 DSU requires that third parties receive all pre -
meeting submissions of the parties (including rebuttal submissions) in the context of an acc elerated proceeding 
under Article 21.5 DSU that involves only one meeting of the parties and third parties with the Panel." Ibid, 
para. 234.    
24 See, e.g., Appellate Body Report, US – Upland Cotton (Article 21.5 – Brazil) , paras. 404, 415.  
25 Appellate Bod y Report, US – Continued Suspension , Para. 336.  WT/DS353/RW/ Add.1  
 
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 24. Further, it appears to u s that the rationale underlying the need for an Annex V procedure in 
original panels involving serious prejudice claims is equally applicable in compliance panels 
involving serious prejudice claims. As the Appellate Body explained in the original proceedin gs in 
this dispute:  
Disputes involving claims of serious prejudice are characterized by the need for a 
complainant to adduce extensive evidence of the market effects of the challenged 
subsidy, including in third -country markets, as well as by the fact that  much of the 
information relating to the subsidization will be within the sole control of the 
government of the responding Member or found only in the territories of third -country 
markets in which the subsidized products are sold….."26 
25. The Appellate Bod y has further explained that the Annex V procedure is meant to be 
completed at an early stage of a panel proceeding:  
The provisions of Annex V also convey the importance of the time at which and within 
which an Annex V procedure is to be conducted. Paragr aph 5 stipulates that the 
information -gathering procedure should be completed within 60 days of the date of 
establishment of the panel, and paragraph 4 of Annex V refers to "the timely 
development of the information necessary". The latter paragraph also re fers to the 
"subsequent multilateral review of the dispute", thereby making clear that the 
information -gathering is meant to be completed prior to the panel's substantive 
consideration of the matter.27 
26. In short, the Appellate Body has concluded that:  
In this way, Annex V sets out a comprehensive scheme designed to collect the kind of 
information that will need to be relied upon by the parties in a serious prejudice 
dispute. The scheme aims to foster the cooperative exchange of information at the 
earliest  possible opportunity, and thereby contribute to the prompt resolution of these 
particularly complex disputes.[footnote omitted].28 
27. We note that compliance panels regarding serious prejudice are, even if not invariably, at 
the very least highly likely t o share the features that make Annex V procedures necessary in 
original panel proceedings, such as the need for extensive evidence of the market effects of the 
challenged subsidy, including in third country markets, as well as the need for evidence of 
subsidization that is within the sole control of the government of the responding Member. The 
United States contends that the text of Annex V does not fit well with a compliance proceeding, 
because much of the information identified in Annex V.5 would already have been established in 
the original proceeding.29 We note however that a determination of the consistency of a measure 
taken to comply will often require the review of amended or even completely new measures,30 
while a consideration as to whether a the res ponding Member has removed the adverse effects of 
a measure may well require the review of new data for a more recent reference period.31 
28. In addition, the United States contends that the text of Annex V does not fit with a 
compliance proceeding because the Annex V procedure is to be completed within 60 days of 
referral to the DSB, while under Article 21.5 a compliance panel is to be completed within 90 days 
of referral of the matter to the panel.32 We acknowledge that it is unlikely that a compliance pane l 
would be able to complete its work in the thirty -day period remaining after receiving information 
from the Annex V procedure (indeed, we consider that the 90 -day period for compliance panels is 
unrealistic, particularly in a serious prejudice case), but we note that even in an original serious 
prejudice proceeding a panel is expected to complete its work within 120 days of the date of 
composition and establishment of the panel's terms of reference.33 In any event, the accelerated 
                                               
26 Appellate Body Report, US – Large Civil Aircraft (2d Complaint) , para.  513. 
27 Appellate Body Report, US – Large Civil Aircraft (2d Complaint) , para. 515.  
28 Appellate Body Report, US – Large Civil Aircraft  (2d Complaint ), paras. 517.  
29 US Reply, para. 29  
30 See, e.g., Australia – Salmon (Article 21.5 - Canada ), para. 7.21.  
31 See, e.g., Panel Report, US – Upland Cotton (Article 21.5 - Brazil) , paras. 10.15 -10.19.  
32 US Reply, para. 29.    
33 ASCM Article 7.5.  WT/DS353/RW/ Add.1  
 
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 time-frame provided for in  compliance panels in our view reinforces the need for an effective and 
early mechanism for the collection of information, rather than weakening it.                      
29. In short, we consider that the DSU, and the special or additional rules and proced ures 
identified in Appendix 2, set forth the rules governing "original" panel proceedings. Article  21.5 
establishes that, except to the extent that it would be inconsistent with the specific requirements 
of Article 21.5 or the nature of and function of com pliance panels, these dispute settlement 
procedures also apply in compliance panel proceedings. Applying these considerations to the case 
at hand, we conclude that Annex V procedures are made available in compliance proceedings by 
operation of the provisio ns of Article 21.5.      
30. We recall that Annex V is a special and additional rule or procedure identified in Appendix 2 
of the DSU, and that under Article 1.2 of the DSU, where there is a difference between the rules 
and procedures of the DSU and those of Appendix 2, the special or additional rule or procedure 
shall prevail. As the Appellate Body has explained, this means that the rules of procedure of the 
DSU apply together  with the special or additional provisions of the covered agreement except that, 
in the case of a conflict between them, the special or additional provision will prevail. 34 In this 
case, we see no conflict. Annex V provides that its procedures are available in (original) panel 
proceedings where a panel relating to serious prejudice is established under Article  7.4. Annex V 
itself does not however speak to the question of its application in compliance panel proceedings; 
such a determination depends rather upon Article 21.5. We understand Article 21.5 to mean that, 
except to the extent th at it would be inconsistent with the specific requirements of Article 21.5 or 
the nature of and function of compliance panels, the dispute settlement procedures that apply in 
original panel proceedings also apply in compliance panel proceedings. There is t herefore no 
question of a conflict between Annex V and Article 21.5. Rather, these two provisions can be read 
harmoniously to make Annex V available in compliance panel proceedings.  
31. The issue we are called on to decide today is limited to whether Annex  V is among "these 
dispute settlement procedures" referred to in Article 21.5. Although we have been required to 
interpret a number of provisions in order to resolve this question, we need not, and do not, 
express any opinion about the applicability of Art icle 7.4 in compliance proceedings, nor indeed 
about the applicability of any other provision not necessary to the resolution of this dispute. We 
simply note that there remain important differences of view on such issues as the applicability of 
Articles 4 and 6 of the DSU in compliance proceedings, that the jurisprudence has not to date 
resolved these questions, and that our resolution of the issue of Annex V does not prejudge 
them.35 
32. Finally, we recall the US' argument that, if the European Union were c orrect that this Panel 
was established pursuant to Article 7.4 of the ASCM, the European Union was required to wait 60 
days before seeking establishment of a panel, such that the EU request was premature. Further, 
the United States contends that in this si tuation, the negative consensus rule for establishment of 
a panel does not apply and the DSB did not establish this Panel.36 We note first that the 
United  States is not asking us to rule that this Panel was not properly established. Rather, it is 
merely ass erting that if the European Union were correct that this Panel was established under 
                                               
34 Appellate Body Report,  US – FSC, para. 159.  
35 In Mexico – Corn Syrup (Article 21.5 - US), for example, the Appellate Body was asked to determine 
whether the compliance panel erred in failing to consider the implications of the failure of the United States t o 
seek consultations. The Appellate Body explained that:  
 
Mexico and the European Communities seem to argue that the Panel was required to address the 
issue of consultations because consultations are an indispensable element of proceedings under 
Article 21 .5 of the DSU. They interpret the phrase "these dispute settlement procedures" in 
Article 21.5 of the DSU as referring to all procedures contained in the DSU, including the 
provisions concerning consultations under Article 4 of the DSU and the provisions c oncerning 
establishment of a panel under Article 6. The United  States, on the other hand, believes that the 
phrase refers to something less than all procedures contained in the DSU and, in particular, that 
the only prerequisite set forth in Article 21.5 is  that there exist a disagreement as to whether a 
Member has implemented the recommendations and rulings of the DSB. (para. 5 2). 
 
Ultimately, the Appellate Body found that it did not need to examine these differences of interpretation 
as Mexico had not rais ed an objection before the Panel and the Panel was not required to address the issue on 
its own motion (paras. 53, 75).  
36 US Reply, para. 19.  WT/DS353/RW/ Add.1  
 
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 Article 7.4 - which the United States contests - then the Panel would not have been properly 
established. As we do not decide whether this Panel was established under Arti cle 7.4, we need 
not further consider the US argument on this issue.37  
33. In light of our reasoning above, we find that Annex V procedures are available in compliance 
proceedings. As it is not disputed that a panel was established in this compliance proce eding to 
consider, inter alia , issues relating to serious prejudice, and that the EU requested the initiation of 
an Annex V procedure, we conclude that the conditions for initiating an Annex V procedure were 
met. Recalling the Appellate Body's ruling that "the first sentence of paragraph 2 of Annex V to the 
SCM Agreement must be understood as requiring the DSB to take action, and that such action 
occurs automatically when there is a request for an Annex V procedure and the DSB establishes a 
panel….",38 we find that automatic initiation of an Annex V procedure has occurred.  
34. We recall that the European Union makes a series of additional requests for rulings 
regarding US actions and inactions in respect to Annex V and the evidentiary implications arising 
therefrom. Specifically, it asks us to rule that: (a) "…the United States has failed to comply with its 
obligations under Annex V, and in particular has failed to cooperate in the development of 
evidence…as required by Annex V.1; (b) the European Union is ent itled to present its case based 
on the evidence available to it, pursuant to Annex V.6; (c) we may complete the record as 
necessary relying on best information available; (d) we should draw adverse inferences from the 
non-cooperation of the United States; (e) ordinarily we should not request additional information 
from the United States to complete the record where the information would support the US 
position and the absence of that information in the record is the result of the unreasonable failure 
of the  United  States to co -operate in the Annex V procedure..." At this stage in this proceeding, we 
do not consider it appropriate to make these additional rulings requested by the European Union. 
We have received no substantive submissions from the parties, an d are in no position to assess 
whether and to what extent the ability of the European Union to obtain the evidence necessary to 
present its case will be affected by US actions and inactions in respect of Annex  V.39 Further, the 
European Union has asked this  Panel to seek information under Article 13 of the DSU, a request 
we take up below, and has acknowledged that rulings on its final four ruling requests might not be 
necessary.40 Thus, we consider that it would be premature for us at this stage to pronounce on the 
evidentiary implications flowing from the fact that information has not been gathered pursuant to 
the Annex V procedure initiated in this proceeding.  
35. Having found that an Annex V procedure has been initiated, the question arises how to 
proceed in this dispute. One approach would be for the parties to revert to the Annex V procedure 
in order to gather evidence in this dispute. Although the United States has taken the position that 
no such procedure was initiated, it has indicated that, if we were  to find that an Annex V procedure 
was initiated, the United States would participate in that procedure.41 However, we understand 
that the European Union does not intend to proceed with an Annex V procedure at this stage.42 
Rather, our understanding is that the European Union wants to advance the information -gathering 
process as expeditiously as possible and to this end has chosen instead to request that we exercise 
our authority to seek information under Article 13 of the DSU.43 Nor has the United States 
                                               
37 We note that the European Union and the United States entered into a sequencing agreement 
pursuant to which the European Union would seek consultations and could after a 15 -day consultation period 
seek establishment of a panel "pursuant to Article 21.5 of the DSU". WT/DS/353/14, para. 1. In light of the 
basis for our conclusions here, we need not further consider wh at implications, if any, this agreement would 
have on the US argument regarding a 60 -day consultation period.     
38 Appellate Body Report, US – Large Civil Aircraft , para. 524.  
39 We note in this regard the Appellate Body's comments in the original proceedi ngs in this dispute: "We 
fail to see how we can answer questions relating to the extent of the United States' co -operation in the abstract 
for the entire dispute. Whether there has been a failure to cooperate or a refusal to submit essential 
information, a nd whether there is a resulting need to use adverse inferences, are questions that usually refer 
to specific claims, measures or pieces of evidence." Appellate Body Report, US – Large Civil Aircraft , para. 542.  
40 More specifically, the European Union has s tated that "If, and only if, all the EU questions are put to 
the United States in a timely manner, and full and timely responses obtained, might it become unnecessary…." 
for the Panel to make findings on its final four requests. EU Request, para. 27.   
41 US Reply, para. 32.  
42 Should our understanding be incorrect, we request that the European Union inform us promptly.    
43 Letter of the European Union to the Panel, dated 5 November 2012 ("We further ask [the Panel] to 
exercise [its] right under Article 13 o f the DSU to seek information from the United States, in order to 
immediately make good, in a timely manner, this gross infringement of the EU's due process rights.").   WT/DS353/RW/ Add.1  
 
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 objected to the resort to information -gathering by the Panel under Article 13. We therefore turn to 
the EU's request in this regard.          
The European Union's request under Article 13 of the DSU  
 
36. The European Union requests that this Panel exercise its  right under Article 13 of the DSU to 
seek information, by sending to the United States the Annex V questions already prepared by it. 
The European Union further requests that we ask the United States to respond within a time -limit 
to be set by the Panel, t aking into account the 60 -day period in Annex V.4, the fact that these are 
compliance proceedings and should therefore proceed on an accelerated basis, and the time -limit 
to be fixed for the filing of the EU first written submission.44 The EU notes that whi le panels have 
been reluctant to seek information under Article 13 at an early stage of the proceedings, we should 
consider the "exceptional circumstances" of this case.45 The European Union further requests that 
we apply "the standard … of reasonableness s et out in Annex V"…. and "exercise very great 
caution" when considering whether or not to strike a question of the grounds it is unreasonable.46 
37. The United States observes that panels have universally declined to seek information under 
Article 13 at suc h an early point in the proceedings, but considers that there are "unique reasons" 
that justify such a departure here.47 The United States requests that the Panel, in exercising its 
right to seek information under Article 13: (a) provide that any request is  on a firm legal footing, 
and make clear the reasons that invocation of Article 13 is appropriate in this situation; (b) seek 
an explanation from both parties as to why particular information requests are appropriate or not; 
(c) provide a period for respon ding to questions that is consonant with the volume and nature of 
the information requested and consistent with panels' practice regarding information requests; and 
(d) address both parties' preliminary ruling requests before seeking information.48 
38. As always, our starting point is the text of the WTO Agreement, in this case Article  13.1 of 
the DSU. That Article provides as follows:  
1.  Each panel shall have the right to seek information and technical advice from any 
individual or body which it seems appr opriate. However, before a panel seeks such 
information or advice from any individual or body within the jurisdiction of a Member 
it shall inform the authorities of that Member. A Member should respond promptly and 
fully to any request by a panel for such information as the panel considers necessary 
and appropriate. Confidential information which is provided shall not be revealed 
without formal authorization from the individual, body, or authorities of the Member 
providing the information.  
39. Article 13 of  the DSU makes a grant of discretionary authority to panels enabling them to 
seek information from any relevant source, as they deem appropriate in a particular case.49 The 
Appellate Body has stated that Article 13.1 imposes no conditions on the exercise of  this 
discretionary authority.50 Moreover, in Canada – Aircraft , the Appellate Body observed that there is 
nothing in either the DSU or the ASCM to support the assumption that a Member’s duty to respond 
promptly and fully to a panel’s request for informatio n arises only after the opposing party to the 
dispute has established a prima facie  case that its complaint or defence is meritorious.51 As the 
Appellate Body stated:   
To the contrary, a panel is vested with ample and extensive discretionary authority to 
determine when  it needs information to resolve a dispute and what information it 
needs. A panel may need such information before or after a complaining or a 
                                               
44 EU Request, para. 24.  
45 Ibid, para. 25. 
46 Id., para. 26  
47 The reasons identified by the United States are the agreement of the parties, that the panel and 
Appellate Body reports in the original proceedings provide a body of information and legal background that will 
help the Panel to evaluate what information to seek, and that some of the  information sought the United States 
would otherwise have included in its first submission. US Reply, para. 40.      
48 US Reply, para. 39.  
49 Appellate Body Report, Argentina – Textiles and Apparel , para.  84; Appellate Body Report, EC – 
Hormones , para.  147; Appellate Body Report, US – Shrimp , para. 106.  
50 Appellate Body Report, Canada – Aircraft , para. 185.   
51 Appellate Body Report, Canada – Aircraft , para.  192. WT/DS353/RW/ Add.1  
 
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 responding Member has established its complaint or defence on a prima facie  basis. A 
panel may, in f act, need the information sought in order to evaluate evidence already 
before it in the course of determining whether the claiming or the responding Member, 
as the case may be, has established a prima facie  case or defence.52 
40. Finally, in the original pr oceedings in this dispute, the Appellate Body explained that in 
considering whether to exercise its authority under Article  13 of the DSU, particularly where a 
party has made an explicit request that it do so, a panel should have regard to considerations s uch 
as what information is needed to complete the record, whose possession it lies within, what other 
reasonable means might be used to procure it, why it has not been produced, whether it is fair to 
request the party in possession of the information to su bmit it, and whether the information or 
evidence in question is likely to be necessary to ensure due process and a proper adjudication of 
the relevant claim(s).53   
41. We note that this Panel has been asked to exercise its right to seek information under 
Article 13.1 of the DSU . We have not been requested by the parties to conduct the Annex V 
procedure, nor have we been designated by the DSB as facilitator in that procedure. Thus, the 
question before this Panel is whether, and how, it should exercise its "r ight to seek information 
and technical advice from any individual or body which it seems appropriate" under Article 13. 
Since the authority for an information request by this Panel is derived from Article 13 of the DSU, 
it follows that our exercise of that  authority is also bounded by Article 13, and not by Annex V.      
42. That said, we believe that in exercising our "ample and extensive discretionary authority" we 
should take into account the circumstances in which we are considering the exercise of that  
authority. Thus, the fact that the European Union was entitled to but did not benefit from the 
procedures in Annex  V for developing information is in our view a relevant consideration that we 
may take into account.54 More generally, and as noted above,55 the Appellate Body has explained 
that serious prejudice cases require extensive evidence, much of which is within the sole control of 
the responding Member or found only in the territories of third -country markets. These 
characteristics of serious prejudice cases appear to us to be highly relevant where, as here, that 
evidence has not been adduced through Annex V procedures.  
43. The European Union requests that we make a request for information at the outset of this 
proceeding, prior to the first submissions of the parties. The United States concurs that it would be 
appropriate to make such an early request, although for different reasons than those advanced by 
the European Union.  
44. We note that, although it is unusual for a panel to make an Article 13 reque st this early in 
the proceeding - indeed, we are aware of no case where a request has been made prior to the 
parties' first submissions -- we are vested with ample and extensive discretionary authority to 
determine when  we need information to resolve a dis pute.56 Further, Annex V allows parties in 
serious prejudice cases access to information at the "earliest possible opportunity".57 Indeed, the 
Annex V procedure is meant to be completed prior to the panel's substantive consideration of the 
matter.58 In this c ase, the European Union should have had such access through an Annex V 
procedure initiated on 23 October 2012. These considerations are relevant to why information was 
not produced, and whether it is fair to request the United States to produce information  at this 
early stage, factors the Appellate Body has considered relevant in determining whether a panel 
should exercise its authority under Article 13. Under these circumstances, and given that the 
United  States does not contest its appropriateness, we hav e determined to make a request under 
Article  13 prior to first submissions.  
45. The European Union argues that in determining what questions to pose, this Panel should 
not at this stage in the process dwell upon the issue of what questions it might itself consider 
                                               
52 Appellate Body Report, Canada – Aircraft , para.  192 (original emphasis).  
53 Appellate Body Rep ort, US – Large Civil Aircraft (2nd complaint) , para.  1140.  
54 We note that the Appellate Body considered this among other factors in deciding whether the Panel 
should have exercised its Article 13 authority in the original proceedings. Appellate Body Repor t, US – Large 
Civil Aircraft, (para. 1142).      
55 See paragraph 24.  
56 See paragraph 39.  
57 Appellate Body Report, US – Large Civil Aircraft,  para. 517.  
58 Appellate Body Report, US – Large Civil Aircraft  para. 515.  WT/DS353/RW/ Add.1  
 
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 necessary and appropriate, but rather apply the standard of "r easonableness" set out in Annex  V.59 
The United States responds that this Panel is not free to deviate from the "necessary and 
appropriate" standard set forth in Article 13 of the DSU, a nd that we must exercise our own 
judgement in deciding whether that standard is met.  
46. We agree with the United States that in making a request for information under Article 13 of 
the DSU we must respect the standards set forth in that Article. That said , we recall that whether 
a request for information is necessary and appropriate is necessarily dependent upon the facts and 
the context in which the request was made, which includes in a serious prejudice case issues 
relating to the availability of evidenc e obtained in an Annex V procedure. We note in any event 
that the Annex V procedure operates to obtain information "necessary to facilitate expeditious 
multilateral review of the dispute", and that facilitators have declined to convey questions that 
they c onsider did not meet this requirement.60 Accordingly, while the timing and modality of 
Annex  V procedures may differ from those of requests for information under Article 13 of the DSU, 
the basic purpose is the same -- to gather information that is required by the Panel to resolve the 
dispute.  
47. The United States has asked us to require the European Union to justify the specific 
questions that it has asked the Panel to pose to the United States. In the view of the United 
States, such a justification is requ ired in order to ensure that the questions are "necessary and 
appropriate."61 The European Union responds that it declines the US invitation to unjustifiably 
prolong the process by re -submitting the justifications for its questions.62 While specific 
explanat ions from the European Union regarding its proposed questions to the United States might 
have been useful to the Panel, we have decided in the circumstances of this case to ask the United 
States to comment on the questions suggested by the European Union, and the European Union to 
respond to those comments if it so desires. We consider that this approach should provide us with 
an adequate basis to decide whether or not each of the ques tions suggested by the 
European  Union is necessary and appropriate on the  facts of this case, without unduly delaying our 
work.  
48. The United States has further requested that we allow it to suggest questions to be posed to 
the European Union. The European Union has opposed the US request, arguing, inter alia , that, 
unlike Ann ex V, Article 13 is not a reciprocal process; that allowing such questions at this stage 
would only risk causing further delay; and that under Annex V.9 a panel should not ordinarily 
request additional information to complete the record where the absence o f such information is the 
result of unreasonable non -cooperation.63 The United States responds that there is no basis for a 
finding of non -cooperation, that under Article 13 either party may suggest that a panel request 
information, and that a panel has fle xibility to decide when and how to evaluate such requests. 
The United States further suggests that there are efficiencies in considering both parties' 
suggestions together, and asks that we issue a set of questions to each party simultaneously. The 
United States has submitted suggested questions to the Panel.64   
49. We recall that under Article 13 this Panel has a "right to seek information …which it deems 
appropriate". We further note that the first sentence of Annex V.9 specifies that "nothing in th e 
information -gathering process shall limit the ability of the panel to seek such additional 
information it deems essential to a proper resolution of the dispute…." We can envision that there 
may be circumstances where the Panel may deem information which is in  the possession of the 
European  Union to be necessary and appropriate. Indeed, that information from the complaining 
Member may be required in a serious prejudice case is confirmed by AnnexV.2, which envisions 
information requests to the complaining Member.  Accordingly, we will consider the information 
request proposed by the United States as expeditiously as possible. While we can see the 
simultaneous information requests to the two parties might be useful, we are not however 
convinced that it is necessaril y required in this case. In particular, we are not prepared to delay 
                                               
59 EU Request, para. 26.  
60 See, e.g. Report to the Panel from the Facilitator, 24 February 2006, in Report of the Panel, EC – 
Large Civil Aircraft , Annex C, para. 29.    
61 US Reply, paras. 47 -51. 
62 EU letter of 9 November, para.2.  
63 EU letter of 5 November, para. 4.  
64 Request by the United States fo r the Panel to Request Information from the European Union Pursuant 
to Article 13 of the DSU, 19 November 2012.  WT/DS353/RW/ Add.1  
 
- E-13 - 
 
 action on the EU's proposed questions pending consideration of those proposed by the 
United  States.  
50. Finally, the United States has submitted to the Panel a request for a number of pr eliminary 
rulings, including in relation to the scope of the dispute.65 The United States considers that the 
Panel should rule on its requests prior to making a request for information under Article 13, as this 
would avoid the Panel seeking unnecessary info rmation.66 The European Union responds that the 
requested rulings go to the heart of many issues at the core of a compliance proceeding, that it 
requires answers to its "Annex V/Article 13 questions" in order to respond to the US requests, and 
that it shoul d be allowed to respond to the requests in its first submission. Given their 
extraordinary breadth, the European Union contends, these requests stand for the proposition that 
the Panel should, in effect, decide the case before the informat ion gathering for eseen in Annex  V.67 
51. We recall that the European Union has requested that we seek information under Article 13 
of the DSU, not under Annex V, and that we must therefore consider whether the information the 
European Union asks us to seek is necessary and appropriate. The question whether particular 
measures are within the scope of this dispute may be relevant to whether information regarding 
those measures is necessary and appropriate. At the same time, we are conscious of the 
importance of resolving the E U's request that we seek information under Article 13 promptly. We 
are further aware that information from the information -gathering process is potentially relevant to 
the resolution of the preliminary ruling requests of the United States. Accordingly, we have 
requested that the European Union respond to the US request for a preliminary ruling by 
23 November. We will take the views of the parties expressed in the US request and the EU 
response under consideration and on that basis will determine whether, an d if so to what extent, 
the US request for preliminary rulings will affect the scope of our request for information under 
Article 13.  
52. In summary, our intention with respect to information -gathering under Article 13 of the DSU 
is the following:  
a. The P anel has requested the United States to comment on the questions suggested by 
the European Union by close of business on Tuesday 20 November, and the 
European  Union to respond to those comments by close of business on Friday 
23 November. The Panel has requ ested that the European Union respond to certain 
aspects of the US request for preliminary rulings by the same date.  
b. The Panel will make an information request to the United States under Article 13 of 
the DSU as soon as possible taking into account the  requests and comments made 
and responses received. At that time, and after consultation with the parties, the 
Panel will set a deadline for the United States to respond to its request.  
c. Once the information request has been made and a deadline for the U nited States to 
respond is set, the Panel will propose a timetable to the parties. The proposed 
timetable will allow the European Union adequate time to prepare its first submission 
on the basis of the US responses to the information request under Article 13 of the 
DSU. 
d. Regarding the US request for the Panel to reques t information from the 
European  Union , the European Union commented on those proposed questions on 
Friday 23  November  2012, and the United States has been requested to respond to 
any such co mments by close of business on Wednesday 28 November 2012.  
e. The Panel will make any information request to the European Union under Article 13 of 
the DSU as soon as possible taking into account the request and any comments 
received. At that time, and aft er consultation with the parties, the Panel will set a 
deadline for the European Union to respond to its request.     
                                               
65 US Request for Preliminary Rulings, 13 November 2012.  
66 US Reply, para. 52.  
67 EU letter of 14 November.  WT/DS353/RW/ Add.1  
 
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 ANNEX E -2 
COMMUNICATION OF THE  PANEL DATED 5 DECEMB ER 2012  
 
 
1. In a submission dated 31 October 20121, the European Union requested the Pan el to 
exercise its right to seek information from the United States pursuant to Article 13 of the DSU, by 
sending to the United States the Annex V questions that had previously been prepared by the 
European Union and which were attached to the communicatio n from the European Union to the 
Facilitator dated 25 October 2012.  
 
2. In a communication dated 15 November 2012, the Panel advised the parties that it had 
decided to exercise its authority under Article 13 of the DSU to s eek information from the 
United  States and requested the United States to submit comments on the que stions proposed by 
the European  Union by close of busi ness on 20 November 2012. The Panel also requested the 
European Union to submit any responses to such comments by close of  business on 
23 November  2012. On 26 November 2012, in its Preliminary Rulings and Decision Regarding 
Information -Gathering under Article 13 of the DSU, the Panel rule d that it would make an 
Article  13 request to the United States as soon as possible taking into account the requests and 
comments made and the responses received.  
 
3. Having now received the comments from the United States on the questions proposed by 
the European Union and the European Union's responses to those comments, the Panel has 
decided, in the interes t of advancing this proceeding as quickly as possible, to pose the attached 
questions regarding the NASA and DOD measures to the United States immediately. The Panel is 
continuing to examine the European Union's requests that it seek information with respe ct to other 
matters and expects to make a second request under Article 13 to the United States in the near 
future.  
 
4. The Panel concludes that the information requested by means of the attached questions is 
necessary and appropriate, taking into account the fact that such information had not been 
produced in an Annex V process; that such information is generally not in the public domain and 
the European Union lacks other reasonable means to procure it; and that such information is likely 
to be necessary to en sure due process and a proper adjudication of the relevant claims.  
 
5. The Panel has decided not to seek certain information requested by the European Union 
because such requests seek to elicit argumentation rather than information, or information that 
the Pa nel is not satisfied at this time is likely to be necessary. The Panel would be prepared to re -
examine the European Union's request that it seek this information on the basis of a reasoned 
request by the European Union following the first submissions of th e parties.  
 
6. The Panel is aware that certain of the information that it requests relates in some cases to 
measures that the United States considers are not properly within the scope of the compliance 
proceeding. The Panel's decision to seek such information  by means of the attached questions is 
without prejudice to its ultimate determinations on the scope of the compliance proceeding. The 
parties are invited to make further submissions regarding the measures that properly fall within 
the scope of the complia nce proceeding as part of their first written submissions if they consider 
that it would be useful to do so.  
 
7. Having considered the arguments of the parties regarding the deadline for the United States 
to respond to these questions, the Panel proposes that  the United States produce the information 
sought by means of the attached questions and provide such information to the European Union 
and to the Panel by close of business on Thursday 28 February 2013 . Should the parties wish to 
comment on this proposed deadline, they are invited to do so by close of business on Friday 
7 December 2012 . 
 
Questions omitted.  
                                               
1 European Union, Request for a Preli minary Ruling and Request for the Panel to exercise its Authority 
Pursuant to Article 13 of the DSU, dated 31 October 2012.  WT/DS353/RW/ Add.1  
 
- E-15 - 
 
 ANNEX E -3 
COMMUNICATION OF THE  PANEL DATED 18 DECEM BER 2012  
1. The Panel made an initial request to the United States for information under Article 13 DSU 
in a communication dated 5 December 2012. In that communication the Panel indicated that it was 
continuing to examine the European Union's request that it seek information from the 
United  States with respect to matters other than NASA/DOD measures and that it expected to 
make a second request to the United States in the near future.  
1.  Second phase of Article 13 DSU request to the United States  
2. Regarding matters other than NASA/DOD measures, the Panel has concluded that the 
information requested by means of the attached questions ( Annex A ) is necessary and 
appropriate, taking into account that such information had not been produced in an Annex V 
process; that it is generally not in the public domain and that the European Union lacks other 
reasonable means to procure it; and that it is likely to be necessary to ensure due process and a 
proper adjudication of the relevant claims.  
3. The Panel has decided not to seek certain information requested by the European Union 
because such information requests se ek to elicit argumentation rather than information, or seek 
information that the Panel is not satisfied at this time is likely to be necessary to ensure due 
process and a proper adjudication of the relevant claims, or seek information which is in the 
posse ssion of or otherwise accessible to the European Union . The Panel has also taken into 
account the breadth of the information requested and the extent it would be reasonable to expect 
the United States to provide it. The Panel would be prepared to re -examin e the European Union's 
request that it seek the information on the basis of a reasoned request by the European Union 
following the first submissions of the parties.   
4. The Panel is aware that certain of the information it requests relates in some cases t o 
measures that the United States considers are not properly within the scope of this compliance 
proceeding.  The Panel's decision to seek such information by means of the attached questions is 
without prejudice to its ultimate determinations on the scope of this proceeding. The parties are 
invited to make further submissions regarding the measures that properly fall within the scope of 
this proceeding in their first written submissions if they consider tha t it would be useful to do so. 
The parties are also  requested to provide their submissions relating to the US preliminary ruling 
requests to third parties to the extent they have not already done so.    
2.  Article 13 DSU request to the European Union  
5. The United States has also requested that we seek in formation from the European Union 
pursuant to Article 13 DSU. We indicated in our 26 November 2012 Preliminary Rulings and 
Decision Regarding Information -Gathering under Article 13 of the DSU, that there might be 
circumstances where it would be necessary a nd appropriate to seek information from the 
European  Union. Accordingly, we asked the European Union to comment on the questions 
proposed by the United States and the United States to respond to those comments.  
6. The European Union has objected as a gener al matter to the United States' request that we 
seek information from the European Union on the grounds that it is premature, that a Panel should 
not under Annex V.9 of the SCM Agreement  seek information to complete the record where the 
information would s upport a particular party's position and the absence of the information in the 
record is the result of unreasonable non -co-operation by that party, and that seeking information 
at this point would cause unreasonable delay in the proceedings.  
7. We recall t hat this Panel has a right under Article 13.1 DSU to seek information which it 
consider s "necessary and appropriate". As explained in our 26 November 2012 Rulings and 
Decision, we have at the request of the European Union decided to exercise this authority  at an 
early stage of the proceeding to seek extensive infor mation from the United States. Our objective 
has been to ensure that, in the absence of an effective Annex V procedure, the parties and the WT/DS353/RW/ Add.1  
 
- E-16 - 
 
 panel have early access to the information necessary to a fair and prompt adjudication of this 
dispute on the merits.  
8. Having sought the information requested by the European Union at an early stage of the 
proceeding, we do not consider that it would be appropriate to deny the United States the 
possibility al so to seek information at an early stage. Nor are we prepared to simply deny the 
United States' request on the grounds that it has engaged in what the European Union deems to 
be "unreasonable non -cooperation" in the information -gathering process. Such an a pproach would 
belabour past differences rather than seeking to move these proceedings forward. Rather, our 
intention is to consider the requests of both parties, in a balanced manner, in order to obtain the 
information that is necessary and appropriate to our consideration of this case. As discussed 
below, the United States' request will not delay these proceedings.    
9. Regarding the specific information the United States has requested the Panel to seek from 
the European Union, the Panel has concluded tha t the information requested by means of the 
attached questions ( Annex B ) is necessary and appropriate, taking into account that such 
information had not been produced in an Annex V process; that it is not generally in the public 
domain and that the United States lacks other reasonable means to procure it; and that such 
information is likely to be necessary to ensure due process and a proper adjudication of the 
relevant claims.  
10. The Panel has decided not to seek certain information requested by the United  States 
because such information requests seek information that the Panel is not satisfied at this time is 
likely to be necessary to ensure due process and a proper adjudication of the relevant claims, or 
which is in the possession of or otherwise acc essible to the European Union. The Panel has also 
taken into account the breadth of the information requested and the extent it would be reasonable 
to expect the  European Union to provide it. The Panel would be prepared to re -examine the US 
request that it seek  the information on the basis of a reasoned request by the United States 
following the first submissions of the parties.   
3.  Deadlines for submission of the information requested pursuant to Article 13 DSU  
11. When we made our first request, we proposed a deadline of Thursday, 28 February 2013 for 
the United States to provide the information, and offered the parties an opportunity to comment 
on the deadline. The United States indicated that while the deadline was extremely ambitious, it 
would endeavour to  respond to the questions as fully as possible, but requested that we deny any 
European Union request to shorten the period. The European Union, inter alia , recalled the 60 -day 
deadline for Annex V procedures, and requested that the United States be asked to respond to 
certain questions by an earlier deadline in order to allow it to progress in the preparation of certain 
parts of its first written submission.  
12. The Panel is seeking a very substantial volume of infor mation from the United States. While 
we are fully aware that an Annex V procedure in principle must be completed within 60 days of its 
initiation, and we are equally conscious that a compliance panel is an accelerated proceeding, it 
will not advance this proceeding to set an unrealistic deadline  that does not allow the 
United  States time to make a satisfactory response to the questions posed, taking into account the 
extent of the information sought and the need to review that information in light of issues relating 
to confidentiality.  
13. The Pan el does however consider that the European Union's proposal for a phased response 
is a reasonable one. Accordingly, the Panel requests that the United States respond to 
questions 1 -4, 11, 23 -24 and 30 by close of busine ss on Friday, 25 January 2013. The 
Panel requests that the United States respond to all remaining questions, including 
those attached as Annex A to this communication, by c lose of business on Thursday, 
28 February 2013 .   
14. The Panel requests that the European Union also respond to all ques tions attach ed as 
Annex  B by close of business on Thursday, 28 February 2013.        
Questions omitted.  
 WT/DS353/RW/ Add.1  
 
- E-17 - 
 
 ANNEX E -4 
COMMUNICATION REGARD ING THIRD PARTY RIGH TS DATED 25 JANUARY 2013 
1. By letters dated 19, 20 and 21 December  2012,  respectively, Brazil, Austral ia and Canada, 
third parties to this dispute, expressed concerns regarding third party rights in the present 
proceeding. Specifically, these third parties note that the third parties were initially n ot made 
aware of a request by the European Union for a pr eliminary ruling regarding the interpretation of 
provisions relating to the initiation of procedures under Annex V of the Agreement on Subsidies 
and Countervailing Measures ( "SCM Agreement ") and their applicability to this dispute, as well as 
requests by b oth the European Union and the United  States for the Panel to exercise its right to 
seek information under Article 13 of the Understanding on the Rules and Procedures governing the 
Settlement of Disputes ( "DSU"). Moreover, it appears that only when the Pan el circulated its 
preliminary ruling of 26 November 20121 were the third parties made aware of a reques t for a 
preliminary ruling by the United States. In the view of these third parties, these requests and the 
responses thereto should have been provided t o third parties pursuant to Article  10.3 of the DSU .  
 
2. Specifically, Brazil requests that all parties' submissions be made available to third parties 
and that the Panel revise its timetable to accord third parties the opportunity to make submissions 
on the  issues discussed in the preliminary rulings. Australia does not seek to have the panel revisit 
its preliminary rulings of 26 November 2012, but requests the Panel to acknowledge the rights and 
concerns of third parties with respect to due process and inco rporate them fully into future 
procedural arrangements. Canada requests the Panel to instruct the parties to provide to the third 
parties all submissions relating to the European Union's request for a preliminary ruling, and 
reserves the right to submit co mments at a future date. Finally, Brazil and Australia request the 
Panel to provide transparency regarding the Article 13 process by informing the third parties of the 
procedure through which the Article 13 requests were dealt with and to provide the parti es' 
responses to the third parties2, subject to the protection of BCI and HSBI.  
 
3. A summary of the procedural history may help to clarify the issues before the Panel. This 
Panel was established by the DSB on 23  October 2012. Eight days later, on 31 October,  the 
European  Union requested the Panel to rule "at the earliest opportunity" that an Annex V 
procedure had been automatically initiated and to "immediately" seek information under Article 13 
of the DSU.3 The United States responded to these requests on 8  November 2012 and also 
indicated its intention to make its own request that the Panel seek information  from the 
European  Union pursuant to Article 13 of the DSU.4 The United States mad e its Article 13 request 
on 19  November 2012.5 There followed various ex changes between the parties, including 
comments by each party on the questions proposed by the other.6 None of these communications 
was served on the third parties.   
 
4. In addition, on 13 November 2012, the United States made request s for various preliminary  
rulings regarding the scope of th e proceeding , and a number of communications regarding those 
                                               
1 Preliminary Rulings and Decision Regarding Information Gathering under Article 13 of the DSU, dated 
26 November 2012.  
2 Brazil req uests alternatively that the results of the Article 13 requests be circulated to all Members.   
However, Article 10.3 of the DSU relates exclusively to the rights of third parties, and Brazil has pointed to no 
other provision of the DSU in support of this s uggestion.     
3 European Union, Request for a Preliminary ruling and Request for the Panel to exercise its Authority 
Pursuant to Article 13 of the DSU, dated 31 October 2012.  
4 United States, Reply of the United States to the EU Request for a Preliminary Ruling and the EU 
Request for the Panel to Request Information under Article 13 of the DSU, dated 8 November 2012.  
5 United States, Request by the United States or the Panel to Reques t Information from the 
European  Union Pursuant to Article 13 of the DSU, dated 19 November 2012.  
6 United States, Comments by the United States on Questions Proposed by the European Union for the 
Panel to Use to Seek Information Pursuant to Article 13 of the DSU, d ated 20 November 2012; 
European  Union, European Union Comments o n the United States Comments on the Questions Proposed for 
the United States Pursuant to  Article 13 of the DSU, dated 23 November 2012; European Union, Letter 
providing comments on the United States ' Article 13 Request, dated 23 November 2013; United State s, US 
Comments on EU Comments on the Request by the United States for the Panel to Request Information from 
the EU Pursuant to Article 13 of the DSU, dated 28 November 2012.  WT/DS353/RW/ Add.1  
 
- E-18 - 
 
 requests followed .7 On 18 December 2012 the Panel requested that the parties provide their 
submissions regarding the US preliminary rulings requests to the third  parties to the extent they 
had not already done so.8 The third parties were advised of t his by the Panel on 
21 December  2012 and were informed that they would have an opportunity to address the issues 
in their third party submissions if they so wished.9 Under these circumstances, the Panel does not 
consider it necessary to further address third party access to these communications.  
 
5. As noted earlier, on 26  November 2012, the Panel issued preliminary rulings finding, inter 
alia, that an Annex  V procedure ha d been initiated,  indicating the Panel's  intention to pose 
questions pursuant to Article 13 of the DSU , and setting forth a procedure for the information 
gathering under Article 13 .10 This communication was served on the third parties.  
 
6. On 5 December 2012,  the Panel made a first information request, pursuant to Article 13 of 
the DSU, to the United States, and on 18 December 2012, the Panel made additional Article 13 
requests to the United States and to the European Union.11 The Panel did not serve these requ ests 
on the third parties. Also on 18  December 2012, the Panel provided its final Working Procedures to 
the parties and third parties; paragraph 20(a) of those Procedures provides that each party shall 
"serve its submissions to the substantive meeting of t he panel on the third parties".12   
 
7. The Panel at the outset acknowledges the important role played by third parties in panel 
proceedings.  As provided by Article 3.2 of the DSU , one of the functions of the dispute settlement 
system is to clarify the provisi ons of the covered agreements. Thus, third parties have potentially 
significant systemic interests in the interpretations developed by panels. Third parties may also 
have a concrete interest in the matter at issue.  Further, the views of third parties can b e helpful in 
ensuring that panels have before them all of the elements necessary to assist them in developing 
robust interpretations of the covered agreements. It is for these reasons that the DSU provides 
Members having a "substantial interest" in a matte r before a panel "an opportunity to be heard by 
the panel and to make written submissions to the panel".13 As a necessary corollary of t his right of 
participation, Article  10.3 of the DSU  provides that third parties shall "receive the submissions of 
the par ties to the dispute to the first meeting of the panel."   
 
8. The rights of third parties in panel proceedings are limited to t he rights granted under 
Article  10 and Appendix 3 to the DSU.14 Thus, the right of third parties to be heard by a panel has, 
consisten t with paragraph 6 of the Working Procedures in Appendix 3 to the DSU, typically been 
provided through a third -party session of the first meeting of the Panel; third parties are not 
entitled to attend the panel's session with the parties at the first meeti ng, or to participate in the 
panel's second meeting. Similarly, the right of third parties to make w ritten submissions has 
ordinarily  been satisfied through submissions made after the first submissions of the parties and 
prior to the first meeting of the p anel; third parties are not typically authorized to make any 
further subsequent submissions to the pan el. Nor, consistent with Article 10.3 of the DSU, have 
third parties generally received submissions of the parties made after t he first meeting of the 
panel. That said, a panel has the discretion to grant additional participatory rights to third parties 
in particular cases, provided that those rights are consistent with the provisions of the DSU and 
                                               
7 United States, Requests by the United States of America for Preliminary Ruling s, dated 
13 November  2012; European Union, European Union Response to the United States Requests for Preliminary 
Rulings, dated 23 November 2012; United States, Letter regarding response to  European Union's response to 
the United  States ' requests for prelimi nary rulings, dated 26 November 2012; European Union, Letter 
regarding the United States ' request to comment on the European Union 's comments on the United States ' 
Requests for Preliminary Rulings, dated 27 November 2012; United States, Reply of the United  States of 
America to the EU Response to the US Requests for Preliminary Rulings, dated 3 December 2012.  
8 Communication from the Panel to the Parties, dated 18 December 2012.  
9 Communication from the Panel to the Third Parties, dated 21 December 2012.  
10 Preliminary Rulings and Decision Regarding Information Gathering under Article 13 of the DSU, dated 
26 November 2012 , para. 52 . 
11 Communication from the Panel to the Parties, dated 5 December 2012; Communication from the 
Panel to the Parties, dated 18 Decem ber 2012.  
12 As is often the case in implementation proceedings, the Working Procedures in this proceeding 
envision a single substantive meeting of the panel.   
13 Art. 10.2 of the DSU.   
14 Appellate Body Report, US – 1916 Act , para. 143; Appellate Body Repo rt, US – FSC (Article 21.5 – 
EC), para. 243.  WT/DS353/RW/ Add.1  
 
- E-19 - 
 
 the principles of due process15, and panels have often exer cised this discretion where they 
considered that it was appropriate in the case at hand.16  
 
9. In this dispute, Brazil, Australia and Canada contend  that t hey were entitled under 
Article  10.3 of the DSU to receive the preliminary ruling request of the Europea n Union regarding 
the interpretation and application of Annex V to the SCM Agreement . Brazil and Australia further 
request that the third parties receive the communications of th e European Union and the 
United  States regarding their respective requests for  the Panel to seek information purs uant to 
Article 13 of the DSU. As noted above, Article 10.3 of the DSU entitles the third parties to receive 
"the submissions of the parties to th e first meeting of the panel." This raises the question whether 
the prelimi nary ruling request regarding the interpretation and application of Annex V to the SCM 
Agreement and the parties' communications regarding their respective requests for this Panel to 
seek information under Article  13 of the DSU  fall within the scope of tha t Article 10.3 of the DSU 
such that they should have been provided to the third parties.  
 
10. Brazil argues, relying upon an Appellate Body ruling in US – FSC (Article 21.5 - EC) that, 
under Article 10.3 of the DSU, "third parties must be given all of the subm issions that have been 
made by the parties to the panel up to the first meeting of the panel, irrespective of the number of 
such submissions which are made…"17, and that the third parties should have been given access to 
the requests for preliminary rulings  and responses thereto. We note that the Appellate Body's 
ruling in US – FSC (Article 21.5 - EC) was directed to whether a panel is required to provide 
written rebuttals to third parties in an implementation panel involving a single meeting.18 The 
parties i n that dispute did not contest that written rebuttals are "submissions" within the meaning 
of Article  10.3 of the DSU; the only question was whether such rebuttal submissions, which would 
usually be submitted after the first meeting of the panel and hence not provided to third parties, 
were to be provided to third parties where they were submitt ed prior to the first meeting. It was in 
this context that the Appellate Body found that all submissions  made up to the first meeting of the 
Panel had to be provided  to the third parties.        
 
11. While it is thus clear that all submissions  made up to the first meeting of the Panel must be 
provided to third parties, it is less clear whether all communications from the parties can be 
considered "submissions " for purpose s of Article 10.3 of the DSU. The United States agrees with 
Brazil, Australia and Canada that submissions related to preliminary ruling requests, like those 
submitted by the United States and the European Union in this compliance proceeding, are among 
the "submissions " that third parties are entitled to receive. The European Union does not 
specifically address this issue. We note that t he communications relating to the EU preliminary 
ruling request regarding the interpretation and application of Annex V  to the SCM Agreement raise 
substantial issues of legal interpretation that are both systemically important and have significan t 
implications for this dispute. In our view, such communications can properly be considered 
"submissions" within the meaning of Arti cle 10.3 of the DSU, and should therefore have been 
provided to the third parties. The Panel has already served its preliminary rulings regarding the 
interpretation and application of Annex V on the third parties. The Panel accordingly requests 
that the pa rties serve upon the third parties their submi ssions relating to the 
European  Union's request for a preliminary ruling in regard to Annex V to the extent that 
they have not already done so.  
 
12. It is less clear to us whether communications concerning requests  for a panel to seek 
information pursuant to Article 13 of the DSU, and the parties' responses to those requests, 
necessarily constitute "submissions " which third parties are entitled to receive pursuant to 
Article  10.3 of the DSU. In our view, it is diffi cult to answer such a question in the abstract; much 
will depend on the nature of the information sought, the context for the request and the stage of 
the proceeding at which it is made, whether the information involves an elucidation of the parties' 
argum ents or interpretations of the covered agreements, and whether denying third parties access 
                                               
15 Appellate Body Report, US – FSC (Article  21.5 - EC), para. 243.  
16 E.g., Panel Reports, Canada  – Certain Measures Affecting the Renewable Energy Generation Sector  
and Canada – Measures Relating to the Feed -In Tariff Program , para. 1.11; Panel Report, United States – 
Certain Country of Origin Labelling (COOL) Requirements , paras. 2.6 -2.8.  
17 Appellate Body Report, US – FSC (Article  21.5 - EC), para. 245.   
18 Appellate Body Report, US – FSC (Article 21.5 - EC), para. 242: "In this appeal, we must determine 
whether, in refusing to require that the third parties be given access to the second, 'rebuttal', submissions filed 
prior to the sole substantive meeting with the Panel, the Panel acted inconsistently with any pro vision of the 
DSU."      WT/DS353/RW/ Add.1  
 
- E-20 - 
 
 to the communications and results of the Article 13 requests would, in the circumstances, hamper 
the ability of third parties to participate in an informed and mean ingful manner in the third party 
session of the meeting with the parties.19  
 
13. The European Union  observes that not every communication emanating from a party 
following the establishment of a panel is a "submission " within the meaning of Article 10.3 of the 
DSU. The European Union notes that material to which third parties are not privy include, for 
example, communications concerning panel composition, following proposed nominations "to the 
parties " pursuant to Article 8.6 of the DSU, communications from the parties regarding panel 
procedures, following consultations with the "parties " pursuant to Article 12.1 of the DSU, 
communications from the parties concerning confidentiality procedures, following consultations 
with the "parties " pursuant to Article 12.1 o f the DSU and communications from the parties 
regarding the timetable, also following consultations with the "parties " pursuant to Article 12.1 of 
the DSU.  The European  Union submits that Article 13 of the DSU does not provide that a panel's 
exercise of it s discretion to seek information is subject to any prior consultations, but merely 
provides that, before seeking information from any individual or body within the jurisdiction of a 
Member, a panel must inform that Member. The European Union considers that  it is far from clear 
that a communication from a party soliciting the exercise by a panel  of its authority under 
Article  13 of the DSU, or comments thereon, are "submissions " within the meaning of Article 10.3, 
as opposed to communications made in the con text of a provision that does not require any 
consultation with the parties, let alone the third parties. The United States does not consider 
responses to the questions posed by the Panel pursuant to Article 13 of the DSU to be 
"submissions " required to be  served on third parties. The United States further observes that the 
third parties will have access to any information referred to in a party's written submission by 
virtue of its inclusion in such submissions.   
 
14. We would agree that not all communication s from the parties can be considered to be 
"submissions" within the meaning of Article 10.3 of the DSU.  We consider that communications 
regarding a panel's working procedures and timetable, where the DSU requires consultations with 
the parties , but not wit h third parties, may be examples. Further, other routine communications 
regarding procedural matters and not reflecting significant issues of legal interpretation of the 
covered agreements may not rise to the level of "submissions" that must be provided to  third 
parties.20 The particular context in which the Panel has made the Article 13 requests at issue here 
includes, as explained in our preliminary rulings of 26 November 201221, the fact that the 
European Union was entitled to but did not benefit from the procedures for developing information 
in Annex V to the SCM Agreement. Moreover, the Article 13 requests were made at a very early 
stage in the proceeding, prior to the parties' first written submissions. In these circumstances, it is 
reasonable to assume that the parties' responses to the Panel's Article 13 requests, to the extent 
that the information elicited is relevant to the issues in this dispute, will be reflected in the 
evidence and arguments presented by the parties in their respective submissions.  Further, the 
requests at issue here seek large amounts of strictly factual material, much of which is highly 
sensitive government or commercial information.22 In these circumstances, the Panel does not 
consider that the communications concerning requests f or the Panel to seek information pursuant 
to Article 13 of the DSU, and the parties' responses to those requests, constitute "submissions " 
which the third parties are entitled to receive pursuant to Article 10.3 of the DSU.  
 
15. However, given that these part icular Article 13 requests are so closely linked to issues 
concerning the interpretation and application of Annex V to the SCM Agreement23, the Panel  
consider s that it is appropriate in this situation that the communications concerning the Article 13 
reques ts (but not the parties' responses to those requests) be provided to the third parties.  The 
Panel considers that providing the third parties access to these communications will ensure that 
                                               
19 See Panel Report, Canada – Dairy (Article 21.5 - New Zealand and US ), para. 2.34.  
20 For example, past experience in the original proceeding in this dispute would suggest that numerous 
communications may be submitted to this Panel regarding the treatment of specific pieces of information under 
the BCI/HSBI procedures.     
21 Preliminary Rulings and Decision Regarding Information Gathering under Article 13 of the DSU, dated 
26 November 2012 , para. 42 . 
22 This situation thus differs sub stantially from a situation where, for example, a panel seeks scientific or 
other technical advice from experts under Article 13 of the DSU.  
23 Indeed, the EU preliminary ruling request concerning the interpretation and application of Annex V to 
the SCM Ag reement and its request for the Panel to seek information under Article 13 of the DSU were made in 
the same document.  WT/DS353/RW/ Add.1  
 
- E-21 - 
 
 the Article 13 process is sufficiently transparent to alleviate the  concerns expressed by Brazil and 
Australia concerning the possible effects of the Panel's exercise of its discretion to seek information 
pursuant to Article 13 of the DSU on the evidentiary burdens that apply in this proceeding. 
Therefore, the  Panel will now serve upon the third parties the infor mation requests that 
we have  made to the United States and European Union pursuant to Article 13 of the 
DSU. (See attachment.) The Panel requests that the parties serve upon the third parties 
their communications r elating to the EU and US requests for the Panel to seek 
information under Article  13 of the DSU , to the extent they have not already done so.24  
 
16. Finally, we note that, a lthough the third parties did not have an opportunity to comment on 
the issues presente d prior to our preliminary rulings and information requests  pursuant to 
Article  13 of the DSU, Brazil, Australia and Canada have taken the opportunity to express some 
views on systemic issues relating to Annex V  to the SCM Agreement  and Article  13 of the D SU in 
their com munications to this Panel. T he Panel will take these communications into consideration in 
its final report.  The third parties are also invited to provide any further comments on these issues 
in their written submissions, should they so desir e, or in a separate submission filed prior to that 
time.      
 
17. Once again, the Panel would like to acknowledge the important role that third parties p lay in 
WTO dispute settlement. We believe  that the Working Procedures that have been put in place will 
allow the third parties to participate in a mea ningful way in this dispute.   
 
 
_______________  
 
 
 
                                               
24 On 7 January 2013, the European Union served its Request for a Preliminary Ruling and Article 13 
Request on the third parties, along wit h certain other documents relating to the Article 13 Request.    WT/DS353/RW/ Add.1  
 
- F-1 - 
 
 ANNEX F  
OTHER PROCEDURAL RUL INGS OF THE PANEL  
Contents  Page  
Annex F -1 Decision regarding requests for certain information dated 23 October 2013  F-2 
 
 WT/DS353/RW/ Add.1  
 
- F-2 - 
 
 ANNEX F-1 
DECISION REGARDING R EQUESTS FOR CERTAIN INFORMATION DATED 23  OCTOBER 2013  
1  INTRODUCTION  
1.1.  On 9 September 2013, the European Union sent a letter to the Panel concerning, inter alia , 
the redaction of information from documents provided by the Unite d States in support of its 
defense, as well as the United States' withholding of documents, data or other information.1 In 
paragraph 7 of that letter, the European Union alleges that the United States has withheld, 
redacted or failed to produce information  described in eight specific bullet points. Briefly, that 
information consists of (a) three categories of NASA and DOD contracts which the United States 
either allegedly failed to submit in response to the Panel's information request pursuant to 
Article  13 of the DSU, in some cases because the contracts are classified, or which the 
United  States submitted, but with export -controlled, classified or other restricted information 
redacted;2 (b) NASA, DOD and FAA technical reports withheld by the United States o n the basis of 
access restrictions, including export controls, restrictions to government or government 
contractors, or because they are marked "proprietary";3 (c) certain sales campaign -related 
documents;4 (d) NASA "new technology reports";5 (e) schedules  and exhibits to the Vought -Boeing 
Asset Purchase Agreement which were not submitted with the Agreement filed as an exhibit to the 
United States' submission;6 and (f) redacted portions of a Boeing Board of Directors' slide 
presentation entitled "Gemini Upd ate".7  
1.2.  The European Union asks the Panel to request the United States to provide the Panel and the 
European Union with these categories of redacted or withheld information "without delay".8 The 
European Union also requests that, should the United St ates fail to comply with such request, the 
Panel draw the appropriate inference; namely, that the information redacted or withheld would, if 
disclosed, contradict any US assertions with respect to measures and claims implicating that 
information. The Panel  should instead rely on argument and evidence provided by the 
European  Union as the best information available.9  
1.3.  The parties make separate arguments concerning the merits of requesting the United States 
to produce, at this stage of the proceeding, e ach of the eight categories of information identified 
by the European Union in paragraph 7 of its letter of 9 September 2013. As we discuss in greater 
detail below, certain of the requested information was the subject of the Panel's previous Article 13 
request to the United States in December 2012. While the European Union has not specifically 
identified the legal basis on which the Panel should consider the European Union's requests, it 
appears to us that the European Union is asking the Panel to continue to request the United States 
to provide that information. It also appears that, with respect to information not previously sought 
by the Panel, the European Union requests the Panel to make its request to the United States 
pursuant to our authority under A rticle 13 of the DSU.10   
                                               
1 European Union's letter to the Panel dated 9 September 2013.  
2 European Union's letter to the Panel dated 9 September 2013, para. 7, first, second and third bullet 
points.  
3 European Union's  letter to the Panel dated 9 September 2013, para. 7, fourth bullet point.  
4 European Union's letter to the Panel dated 9 September 2013, para. 7, eighth bullet point.  
5 European Union's letter to the Panel dated 9 September 2013, para. 7, fifth bullet poi nt. 
6 European Union's letter to the Panel dated 9 September 2013, para. 7, sixth bullet point.  
7 European Union's letter to the Panel dated 9 September 2013, para. 7, seventh bullet point.  
8 European Union's letter to the Panel dated 9 September 2013, par a. 8. 
9 European Union's letter to the Panel dated 9 September 2013, para. 8.  
10 It is not always clear to us whether the European Union considers its requests with respect to at least 
some of the information to be justified on the basis that the United Sta tes should have provided the 
information in response to the Panel's earlier Article 13 requests, and did not: For example, in paragraph 7 of 
the 9 September 2013 letter, the European Union refers to the withholding and redaction by the United States 
of var ious categories of information, and then states at paragraph 8 that it "therefore" requests the Panel to 
ask the United States to provide such information. Moreover, the European Union states that the United States 
has had many months to provide the inform ation at issue and, if necessary, could have provided it on a rolling 
basis, including with its first or second written submissions, European Union's comments on the United States' 
response dated 23 September 2013, para. 2. On the other hand,  the European Union suggests at other points WT/DS353/RW/ Add.1  
 
- F-3 - 
 
 1.4.  We first consider the requests pertaining to categories of information previously sought by 
the Panel pursuant to Article 13 of the DSU in December 2012.  
2  REQUESTS FOR INFORMA TION COVERED BY THE PANEL'S PREVIOUS ART ICLE 13  
REQUEST  
2.1  The Article 13 request in December 2012  
2.1.  We recall that, in a submission dated 31 October 2012,11 the European Union requested the 
Panel to exercise its right to seek information from the United States pursuant to Article 13 of the 
DSU, b y sending to the United States the Annex V questions that had previously been prepared by 
the European Union and which were attached to the communication from the European Union to 
the Facilitator dated 25 October 2012. On 26 November 2012, in its Prelimin ary Rulings and 
Decision Regarding Information -Gathering under Article 13 of the DSU, the Panel ruled that it 
would make an Article 13 request to the United States as soon as possible taking into account the 
parties' comments and responses regarding the qu estions proposed by the European Union. In 
communications dated 5 December 2012 and 18 December 2012, respectively, the Panel posed a 
series of questions to the United States, requesting information pursuant to Article 13 of the DSU 
which the Panel had con cluded was necessary and appropriate, taking into account the fact that 
such information had not been produced in an Annex V process, was generally not in the public 
domain and the European Union lacked other reasonable means to procure it, and was likely to be 
necessary to ensure due process and a proper adjudication of the relevant claims. The 
United  States submitted its responses to certain of the questions posed by the Panel on 
25 January  2013, its responses to most of the others on 28 February 201312 and provided 
additional materials that were previously unavailable for submission on 22 March 2013.13 
2.2.  In a communication to the Panel dated 6 March 2013, the European Union was critical of 
what it considered to be the United States' "partial responses" to the Panel's questions. The 
European Union stated that it would, in due course, "catalogue fully the extensive shortcomings, 
failures and abuses in the United States' partial responses". Owing to the importance placed by the 
European Union on maintaining  the timetable for this proceeding, including filing its first written 
submission on 28 March 2013, the European Union advised that it would, for the time being, limit 
its request to the Panel to one issue not relevant to the present issues before the Pane l, and would 
"address any further responses and documents the United States deigns to provide to the 
compliance Panel, the full scope of the United States' failings, and the consequences that attach to 
those failings, at a later point in time." In a commun ication dated 7 March 2013, the 
European  Union advised that it was still in the process of reviewing and assessing the responses 
provided to date by the United States to the questions posed by the Panel pursuant to Article 13 of 
the DSU. It stated further that, to the extent that it wished to make comments on the content or 
timing of the United States' responses, it would provide them to the United States and the Panel 
"in due course, once we have had an opportunity to assess the overall process, and consid er what 
the implications may or may not be for these compliance proceedings."  
2.3.  The United States now argues that the European Union could have sought the information it 
alleges the United States failed to provide in response to the Panel's Article 13 requests in 
March  2013, when the European Union described itself as being in the process of reviewing and 
assessing the United States' responses to the Panel's Article 13 requests.14 The United States thus 
                                                                                                                                               
that the Panel should seek the information because it is necessary in order to enable it to rebut arguments 
made by the United States in its submission: For example, the European Union introduces its request by 
referring to t he redaction of information from documents provided by the United States in support of its 
defence, as well as the United States' withholding of documents, data or other information. This is also the 
tenor of the European Union's conditional request that t he Panel draw inferences that the information redacted 
or withheld would, if disclosed, contradict US assertions with respect to measures and claims implicating that 
information, European Union's letter to the Panel dated 9 September 2013, paras. 2 and 8.  
11 European Union's request for a preliminary ruling and request for the Panel to exercise its authority 
pursuant to Article 13 of the DSU dated 31 October 2012.  
12 United States' response to the Panel's request for information pursuant to Article 13 of the DSU, 
dated 28 February 2013.  
13 Letter from the United States to the Panel dated 22 March 2013.  
14 United States' response dated 16 September 2013, para. 1, referring to the European Union's letters 
to the Panel dated 6 and 7 March 2013, respectively.  WT/DS353/RW/ Add.1  
 
- F-4 - 
 
 objects to the timeliness of the European Union rai sing, in September 2013, alleged shortcomings 
in the United States' response to the Panel's Article 13 requests.15 
2.4.  The European Union disputes the suggestion that it has delayed raising these issues. It 
contends that it raised many of its concerns in its first and second written submissions in the hope 
that the United States would rectify the situation in its own submissions.16 The European Union 
provided references to its submissions as examples of instances where it had raised concerns with 
the adequa cy of the United States' response to the Panel's Article 13 request. Thus, in its first 
written submission, the European Union complains of the inadequacy of the United States' 
response to a request for a list of all technical data developed by Boeing unde r the relevant NASA 
R&D programs and DOD RDT&E program elements from FY2006 to present and requests that 
Panel to adopt inferences that Boeing is developing highly valuable LCA -related data through the 
challenged NASA R&D programs and DOD RDT&E program ele ments, maintains rights over such 
data, and that much of that data is never made public.17 In its second written submission, the 
European Union uses the list of NASA technical reports submitted by the United States as evidence 
of the limited disclosure of N ASA research results.18 The European Union also objects in its second 
written submission to what it refers to as the United States seeking "reverse adverse inferences" 
through withholding information and then asking the Panel to infer that such information is 
favourable to it. The specific context for this objection is the United States' withholding of 
information pursuant to its export -control laws or other distribution restrictions. The 
European  Union argues that merely because the description of work in a  NASA or DOD 
procurement contract is export -controlled or otherwise restricted, it does not necessarily follow 
that none of the results of research conducted under that contract could have dual -use 
applications.19 Finally, the European Union referred to a s ection of its second written submission 
concerning certain sales campaign evidence not provided by the United States.20 
2.2  Panel's approach to considering the renewed requests for information  
2.5.  As we said earlier, certain of the categories of informat ion identified by the European Union in 
its letter of 9 September 2013 were within the scope of the Panel's Article 13 request to the 
United  States in December 2012. Specifically, it appears that our Article 13 request encompassed 
the following information  now the subject of the renewed European Union requests:  
a. NASA and DOD contracts withheld, in whole or in part, on the grounds that they are 
export -controlled or classified;21 
b. DOD contracts listed in revised Exhibit US -161 but not produced by the Unite d States;22 
c. DOD contracts that were produced by the United States but portions of which have been 
redacted;23 
d. NASA, DOD and FAA technical reports withheld by the United States on the basis of 
access restrictions, including export controls, restrictions  to government or government 
contractors, or because they are marked "proprietary";24 
                                               
15 United States' response dated 16 September 2013, para. 1.  
16 European Union's comments on the United States' response dated 23 September 2013, para. 3.  
17 European Union's first written submission, paras. 143 -144, 318 -319. 
18 European Union's second written submi ssion, para. 196.  
19 European Union's second written submission, paras. 203,405 -406. 
20 We note that the European Union also asked the Panel, at para. 680 and footnote 1142 of its second 
written submission, to draw an appropriate inference based on the alleg ed failure of the United States to 
respond adequately to question 160 of the Panel's Article 13 questions with regard to the list of Charleston 
County ordinances amending MCIP designations for identified projects or companies, but did not provide this 
exam ple in its comments on the United States' response dated 23 September 2013 or request this information 
in its letter of 9 September 2013.  
21 European Union's letter to the Panel dated 9 September 2013, para. 7, first bullet point. See also 
European Union's comments on the United States' response dated 23 September 2013, para. 7 for an express 
link to the previous Article 13 request.  
22 European Union's letter to the Panel dated 9 September 2013, para. 7, second bullet point. See also 
European Union's comments  on the United States' response dated 23 September 2013, paras. 10 -11 for an 
express link to the previous Article 13 request.  
23 European Union's letter to the Panel dated 9 September 2013, para. 7, third bullet point.  WT/DS353/RW/ Add.1  
 
- F-5 - 
 
 e. NASA new technology reports;25 
f. Certain sales campaign -related documents.26 
2.6.  In December 2012, we had concluded that it was necessary and appropriate to request th e 
information sought from the United States at that time.27 However, it is important to bear in mind 
the unique circumstances of that Article 13 request, in that it was made, with the agreement of 
the parties, prior to their having filed first written submi ssions, in light of our finding that the 
European Union was entitled to but did not benefit from the Annex V procedures for developing 
information. More specifically, the Panel stated that in exercising its discretionary authority, it 
would take into accou nt the circumstances in which it was considering the exercise of that 
authority; namely, the fact that the European Union was entitled to but did not benefit from the 
procedures in Annex V for developing information, that such information generally was not  in the 
public domain and the European Union lacked other reasonable means to procure it, and was likely 
to be necessary to ensure due process and a proper adjudication of the relevant claims.28 The 
Panel noted the unusual circumstance that it was making th e request very early in the proceeding; 
indeed, prior to the complainant's first written submission, and justified its decision to make the 
request on the basis that that European Union should have had access to such information through 
an Annex V procedur e which would have been completed prior to the Panel's substantive 
consideration of the matter, and the fact that the United States did not contest the 
appropriateness, in the circumstances, of the Panel making the Article 13 request prior to the 
parties' first written submissions.29   
2.7.  We regard the following factors as relevant to our consideration of whether, and the extent to 
which, we now pursue the information that was the subject of earlier Article 13 request to the 
United States. First, the broa d character of the requests made in December 2012, which reflect the 
absence of an Annex V process for developing information and the fact that the request was made 
prior to the parties' first written submissions. Secondly, the fact that the proceeding is now at a 
considerably more advanced stage, with the European Union having presented its case, and the 
United States having responded to that case, through first and second written submissions. The 
meeting with the Panel will be held in late October. In add ition, the Panel expects that it will pose 
questions to the parties following the meeting, and that the parties will submit written answers to 
those questions as well as comment on each other's responses to those questions.  
2.8.  It appears to us that, as  regards the Panel's Article 13 request, the United States has in fact 
produced a significant amount of detailed information within a relatively short time -frame.30 We do 
not see any particular utility in pressing the United States to produce information th at it has not 
yet produced simply because it falls within a category of information that was part of the Panel's 
Article 13 request in December 2012. Rather, at this stage of the proceeding, we intend to further 
pursue this information where it is clear to  us, based on the submissions and evidence submitted 
thus far, that it is necessary to obtain such information in order for the Panel to discharge its 
obligations under Article 11 of the DSU, and where it is appropriate to request that information. 
The que stion whether a particular request is appropriate includes a consideration of the reasons 
why the information has not been produced thus far and the difficulty for the United States in 
producing it at this stage, bearing in mind the importance of the infor mation to ensure due process 
and a proper adjudication of the relevant claims.  
                                                                                                                                               
24 European Union's letter to the Panel  dated 9 September 2013, para. 7, fourth bullet point. See 
European Union's comments on the United States' response dated 23 September 2013, paras. 15 -17 for an 
express link to the previous Article 13 request.  
25 European Union's letter to the Panel dated 9  September 2013, para. 7, fifth bullet point.  
26 European Union's letter to the Panel dated 9 September 2013, para. 7, eighth bullet point. See 
European Union's comments on the United States' response dated 23 September 2013, para. 23 for an express 
link to  the previous Article 13 request.  
27 See Communication from the Panel dated 5 December 2012 and Communication from the Panel, 
dated 18 December 2012, para. 2.  
28 Communication from the Panel dated 26 November 2012, paras. 42, 46. See also Communication 
from the Panel, dated 5 December 2012; Communication from the Panel dated 18 December 2012, para. 2.  
29 Communication from the Panel dated 26 November 2012, para. 44.  
30 The Panel's Article 13 request to the United States comprised some 96 questions to which the 
United  States produced in excess of 700 documents in response.  WT/DS353/RW/ Add.1  
 
- F-6 - 
 
 2.9.  We now turn to consider the European Union's specific requests pertaining to the six 
categories of information that were part of the Panel's original Article 13 request t o the 
United  States.  
2.3  NASA and DOD contracts and agreements  
2.10.  The European Union requests the Panel to ask the United States to provide the 
European  Union and the Panel with (a) NASA and DOD contracts (or portions thereof) that the 
United States discusses in its submissions but has withheld or redacted on the grounds that they 
are allegedly export -controlled or classified;31 (b) a number of DOD contracts which the 
United  States had listed in revised Exhibit US -161 but has withheld without explanati on (including 
the "major RDT&E contract for the P8 -A");32 and (c) redacted substantive portions of a number of 
DOD contracts, including 25 contracts listed in the third bullet point of paragraph 7 of the 
European Union's letter dated 9 September 2013.33 
2.11.  The Panel recalls that in its Request to the United States pursuant to Article 13 of the DSU, 
it requested the United States to provide copies of NASA and DOD contracts with Boeing under 
certain listed programs or program elements that were entered into  or provided funding and 
support from FY2006 to present.34 In its response to the Panel's Article 13 request, the 
United  States indicated that it had redacted classified information from the NASA contracts it was 
providing where a small amount of the materi al it provided consisted of classified information.35 It 
provided additional information responsive to these requests in a subsequent submission on 
22 March 2013.36 With respect to the DOD contracts, it indicated that it had redacted classified 
information, information subject to distribution limitations, as well as information subject to export 
controls from the contracts provided.37 It provided additional information responsive to these 
requests in a subsequent submission on 22 March 2013.38 
2.3.1   Export -controlled and classified information in NASA and DOD contracts  
2.12.  The European Union requests the Panel to ask the United States to provide it and the 
European Union with NASA and DOD contracts (or portions thereof) that the United States 
discusses in it s submissions but has withheld or redacted on the grounds that they are allegedly 
export -controlled or classified.39  
2.13.  The United States argues that the European Union has failed to justify its request for 
export -controlled information and that such i nformation is not necessary to the Panel's evaluation 
of the issues before it. According to the United States, the export -controlled information identified 
by the European Union appears in documents which the United States cites primarily for 
arguments sup ported by the non -redacted information in those documents. In some cases, the 
United States cites the documents in support of the statement that the information is export -
controlled. Moreover, it is not appropriate to request this information as its export ation is 
                                               
31 European Union's letter to the Panel dated 9 September 2013, para. 7, first bullet point. The 
European Union states that a number of these contracts are identified in the United States' first  written 
submission at paras. 141, 144, 149, 409, 438 and 450.  
32 European Union's letter dated 9 September 2013, para. 7, second bullet point.  
33 European Union's letter dated 9 September 2013, para. 7, third bullet point.  
34 Request to the United States pur suant to Article 13 of the DSU dated 5 December 2012, questions 5, 
8, 9, 26, 28.  
35 United States' response to the Panel's request for information pursuant to Article 13 of the DSU dated 
28 February 2013, para. 21.  
36 United States' letter to the Panel dated  22 March 2013, providing additional documents with respect 
to Article 13 questions 9 and 10(a).  
37 United States' response to the Panel's request for information pursuant to Article 13 of the DSU dated 
28 February 2013, para. 56.  
38 United States' letter to  the Panel dated 22 March 2013, providing additional documents with respect 
to Article 13 question 28.  
39 European Union's letter to the Panel dated 9 September 2013, para. 7, first bullet point. The 
European Union states that a number of these contracts ar e identified in the United States' first written 
submission at paras. 141, 144, 149, 409, 438 and 450.  Information subject to export controls under the ITAR 
cannot be revealed to foreign nationals without a licence to export such information, see generally  22 U.S.C. 
§ 2778(b)(2). Classified information, on the other hand, cannot be shared with persons lacking the requisite 
security clearance and a need to use that information for government purposes, United States' second written 
submission, para. 337.  WT/DS353/RW/ Add.1  
 
- F-7 - 
 
 prohibited by US law.40 The United States argues that the European Union has similarly provided 
no basis for considering a request for classified information to be necessary and appropriate. The 
stringent limitations on use of such information make  it difficult to envisage how it could be 
relevant to the European Union's claims.41 Moreover, as US law prohibits the provision of classified 
information to persons who do not have the requisite security clearances (or comparable 
clearances issued by autho rities qualified to issue such clearances) it is not appropriate to request 
such information. The United States observes further that the personnel working on this dispute 
have not had access to this information and, depending on its nature, might themselv es be 
prohibited by law from having access to it.42  
2.14.  In its comments on the United States' response, the European Union construes the 
United  States' argument as being that the export -controlled and classified information is not 
necessary to the Panel 's evaluation of the issues before it because such information cannot be 
helpful or relevant to the European Union's claims.43 The European Union considers this general 
assertion to be incorrect and submits that in any event, it is not the place of the Unit ed States to 
unilaterally decide that information requested by the Panel under Article 13 of the DSU is 
irrelevant to the issues in this proceeding, particularly after the United States has itself cited to 
such information. In addition, the European Union argues that the United States may not rely on 
its domestic law to excuse compliance with its WTO obligations or with requests from the Panel. 
The European Union notes that the Working Procedures for this proceeding contemplate the Panel 
applying additional  procedures for the review of, inter alia , "information that the United States 
internally classifies as 'Top Secret', 'Secret', 'Confidential', or controlled pursuant to the 
United  States' International Traffic in Arms Regulation ('ITAR')".44 The European U nion considers 
that the issue is not that US law prohibits the submission of export -controlled information, but that 
the United States should take due and proper steps to make this information available consistent 
with its law. Finally, the European Union argues that, given the United States' responsibility to 
"respond promptly and fully" to the Panel's Article 13 requests, it is incumbent on the 
United  States to propose a "satisfactory alternative approach" should it have concerns about 
providing the reque sted information.45 In this regard, the European Union refers to the compliance 
proceeding in DS316, in which the European Union expressed concerns that the existing BCI/HSBI 
procedures provided insufficient protection for certain extremely sensitive inform ation. The 
European Union in that proceeding proposed possible alternative procedures, and expressed its 
willingness to work with the panel and with the United States to agree on a mutually satisfactory 
approach.46 
2.15.  The withheld or redacted NASA and D OD contracts to which the European Union refers 
through its reference to six paragraphs of the United States' first written submission involve the 
following instruments: (a) a classified statement of work for NASA cooperative agreement 
NNC10AA02A which pro vided for research into a large -scale advanced exhaust system;47 (b) the 
classified statement of work for NASA contract NNC07CB38C;48 (c) NASA Space Act Agreement 
SAA1 -588, Annex 27;49 (d) the statements of work for DOD delivery orders FA8614 -08-D-2080, 
D.O. 21 and FA8614 -08-D-2080, D.O. 22 regarding technologies to improve the performance of 
the C -17, which contain large amounts of text subject to export control;50 (e) export controls on 
discussing even the use or objective of the effort under certain of the t hree DOD procurement 
contracts and four DOD assistance instruments under the Materials and Biological Technology 
program element;51 and (f) "Distribution F" limitations on the statement of work for delivery 
order  73 under DOD contract F10628 -01-D-0016 in re gard to the CNS/ATM DRAGON international 
                                               
40 United States' response dated 16 September 2013, para. 6.  
41 United States' response dated 16 September 2013, para. 7.  
42 United States' response dated 16 September 2013, para. 6, footnote 7.  
43 European Union's comments on the US response dated 23 September 20 13, para. 6.  
44 European Union's comments on the US response dated 23 September 2013, para. 7.  
45 European Union's comments on the US response dated 23 September 2013, para. 7.  
46 European Union's comments on the US response dated 23 September 2013, para. 8 f ootnote 11.  
47 United States' first written submission, para. 141.  
48 United States' first written submission, para. 144.  
49 United States' first written submission, para. 149. This document is submitted as Exhibit US -54(BCI) 
so the Panel assumes that the Eur opean Union's objection regarding this document is that it is redacted.  
50 United States' first written submission, para. 409.  
51 United States' first written submission, para. 438.  WT/DS353/RW/ Add.1  
 
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 cooperative program with the NATO AEW&C programme management organization for the upgrade 
of the US and NATO AWACS fleets.52 
2.16.  The purpose of the United States' references in its first written submission to the fact that 
all or a portion of the above -referenced instruments are export -controlled, classified, or otherwise 
restricted is to seek to demonstrate that work performed under these instruments cannot be 
applied to or used to produce large civil aircraft.53 The European Union has argued in response in 
its submissions that there is no reason to believe that simply because portions of a NASA or DOD 
contract or agreement are export -controlled, classified or otherwise restricted, none of the results 
of the researc h could be relevant to large civil aircraft.54 The European Union has not offered any 
additional rationale as to why the Panel requires the United States to produce any particular 
export -controlled, classified or otherwise restricted instruments, or portion s of those instruments, 
in order to evaluate the merits of those arguments.  
2.17.  At this stage of the proceeding, we are not persuaded that it is necessary to require the 
United States to produce all of the requested export, controlled, classified or ot herwise restricted 
information in the NASA and DOD contracts and agreements in order to evaluate the merits of 
these competing arguments. We consider that it is more appropriate for the Panel to investigate 
this issue through questions to the parties seeki ng to understand the basis for the respective 
arguments, as opposed to seeking the technical information itself. We accordingly decline to 
request this information at this time  (which does not preclude us from revisiting this 
request in the future).  
2.18.  We would add that we do not rule out the possibility that in certain circumstances, a panel 
may consider it appropriate to request information from a party, notwithstanding that its provision 
by a party may be contrary to its own domestic laws. We regard the authority under Article 13 of 
the DSU to operate independently of the domestic law of a Member. However, a panel should 
exercise its authority to request such information with some degree of circumspection, taking due 
account of domestic laws restricti ng or preventing its production as part of its assessment of the 
difficulty faced by a Member. This is especially so when domestic laws reflect legitimate 
government policies of promoting peace and security by restricting opportunities for weapons 
prolifer ation.55 WTO Members are under a duty and an obligation to respond promptly and fully to 
requests made by panels for information under Article 13.1 of the DSU.56 The refusal by a party to 
provide information requested by a panel under Article 13.1 of the DSU  will be one of the relevant 
facts of record, and an important fact, to be taken into account in determining the appropriate 
inferences on the basis of all of the facts of record relevant to the particular determination to be 
made.57 We are not yet faced wi th determining the appropriate inference to be drawn in 
circumstances where information is not provided because of domestic legal restrictions on its 
disclosure.  
2.3.2   Certain DOD contracts listed in revised Exhibit US -161 but allegedly withheld  
2.19.  The European Union requests the Panel to ask the United States to provide it and the 
European Union with a number of DOD contracts that the United States had listed in revised 
Exhibit US -161 but has withheld without explanation. This request includes what t he 
European  Union describes as the "major RDT&E contract for the P8 -A".58 
2.20.  The United States in response states that this request covers six documents, out of a total 
of 190 listed in Exhibit US -161, the remainder of which were submitted by the United  States. The 
United States explains that it excluded three of those six documents from the information 
                                               
52 United States' first written submission, para. 450.  
53 The United States do es not assert that NASA Space Act Agreement SAA1 -588, Annex 27, filed as 
Exhibit US -54(BCI) is subject to any distribution restrictions. We have reviewed this Exhibit and note that the 
only redactions it contains are to Article 5.0, identifying the key Boe ing personnel as the principal point of 
contact between NASA and Boeing in the performance of the agreement and the identity of the Boeing official 
who executed the Annex. We do not consider these redactions to be unreasonable.  
54 European Union's second wr itten submission, paras. 203, 408.  
55 See 22 U.S.C. §2778(a)(1) and (2).  
56 Appellate Body Report, Canada – Aircraft , para. 187, Appellate Body Report, US – Wheat Gluten , 
para. 171.  
57 Appellate Body Report, US – Wheat Gluten , paras. 173 -174. 
58 European Union 's letter dated 9 September 2013, para. 7, second bullet.  WT/DS353/RW/ Add.1  
 
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 gathering process undertaken in response to the Panel's Article 13 request on the grounds that 
they are DOD contracts dating from 2006 or before.59 The ot her three documents are delivery 
orders under DOD contract FA8650 -08-D-3857 relating to a particular programme. The 
United  States says that it has already submitted four delivery orders under this same contract and 
also relating to that same programme.60 The United States says that the contract described by the 
European Union as the "major RDT&E contract for the P8 -A" is in fact listed in Exhibit US -273(BCI) 
but not in Exhibit US -161. The United States argues that the European Union provides no 
justification  whatsoever for its request for the foregoing documents. The first category of 
documents dates from before 2006 while the second category is "in all likelihood similar to other 
contracts already before the Panel in this dispute". Thus there is no reason to  consider the 
information necessary to the Panel's evaluation of the matter before it. Finally, the United States 
argues that it is not appropriate to request such information at this time, given the resources it 
would require at this stage of the dispute.  
2.21.  In its comments on the United States' response, the European Union suggests that there 
are in fact more than six contracts identified in Exhibit US -161 that have not been provided by the 
United States. It identifies other "missing" documents indica ted by Exhibit US -161 as including a 
further three contracts and two delivery orders.61 The European Union notes that the Panel's 
Article 13 request covered contracts "that were entered into or that have provided funding and 
support from FY2006 – present". According to the European Union, the United States does not 
attempt to justify its failure to provide contracts with effective dates prior to 2007, providing the 
example of one withheld DOD contract that, although entered into prior to 2007, allegedly 
provided funding to Boeing after FY2007.62 The European Union also expresses concern that there 
may be additional contracts entered into prior to 2007 that the United States has failed to provide 
or to list. As to the three delivery orders entered into after 20 06, the United States' justification, 
that such delivery orders are "in all likelihood similar" to other contracts already before the Panel, 
is an inadequate basis for declining to provide the requested information.63 
2.22.  The Panel's Article 13 request s ought a list of all DOD contracts involving Boeing under 
certain listed RDT&E program elements that were entered into or that have provided funding and 
support from FY2006 to present.64 The United States responded on 28 February by providing a list 
(at docu ment US -13-0007) which it revised with updated information on 22 March 2013.65 This list 
was submitted into evidence as Exhibit US -161. The Article 13 request also sought a copy of each 
contract identified on the list.66 The United States responded on 28 Feb ruary 2013 that in order to 
facilitate the process of gathering such a large amount of material, the Air Force had excluded 
modifications and distribution orders that were not fully funded by the relevant RDT&E program 
elements. It provided pre -2007 materi als where they were readily available and useful in 
understanding the materials covered by the question.67 On 22 March 2013, the United States 
submitted additional contracts that it had listed but not previously submitted.68  
2.23.  The Panel's Article 13 re quest sought copies of DOD contracts entered into prior to 2007 if 
they provided funding and support  from FY2006 to present, even if their effective dates were prior 
to 2007. We also sought copies of all task/delivery orders under those contracts, regardle ss of 
whether or not those delivery orders are likely similar to other contracts provided to the 
European  Union and to the Panel. It appears to us that the United States has produced the vast 
majority, but not all, of the DOD contracts identified in Exhibi t US-161. It has not identified any 
particular difficulty in producing them, other than the resources that would be required to provide 
                                               
59 United States' response dated 16 September 2013, para. 9.  
60 United States' response dated 16 September 2013, para. 9.  
61 European Union's comments on the US response dated 23 September 2013, para. 9, footnote 13.  The 
European Union also disputes that it "mistakenly" identified the major RDT&E contract for the P8 -A as one of 
the missing contracts listed in Exhibit US -161, referring to Exhibit US -161 and to Exhibit US -273, which both 
list DOD contract  N00019 -04-C-3146.  European Union's comments on the US response dated 
23 September  2013, para. 9, footnote 13.  
62 European Union's comments on the US response dated 23 September 2013, para. 10.  
63 European Union's comments on the US response dated 23 Septemb er 2013, para. 11.  
64 Request to the United States pursuant to Article 13 of the DSU dated 5 December 2012, question 26.  
65 Letter of the United States to the Panel dated 22 March 2013.  
66 Request to the United States pursuant to Article 13 of the DSU, 5 Dec ember 2012, question 28.  
67 United States' response to the Panel's request for information pursuant to Article 13 of the DSU dated 
28 February 2013, para. 55.  
68 Letter of the United States to the Panel dated 22 March 2013 submitting documents US -13-548(HSBI ) 
to US -13-646(HSBI).  WT/DS353/RW/ Add.1  
 
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 them "at this stage of the dispute", which we understand to refer to the fact that requesting the 
documents now would un duly interfere with the United States' preparations for the meeting with 
the Panel later this month.   
2.24.  We are mindful of the central importance of the DOD contracts to the parties' arguments 
concerning the scope of the proceeding, the existence of s ubsidization and the demonstration of 
adverse effects. While we are not convinced of the need, at this stage, to review export controlled, 
classified or otherwise restricted information contained in those contracts, we do consider it 
necessary for our obje ctive assessment of the matter that we have before us a complete set of 
DOD contracts responsive to question 28 of the Panel's Article 13 request.  
2.25.   We therefore advise that we will seek this information from the United States, 
through a request purs uant to Article 13 of the DSU, which we intend to make 
subsequent to the meeting with the parties.     
2.3.3   Redactions in DOD contracts  
2.26.  The European Union requests the Panel to ask the United States to provide it and the 
European Union with the re dacted substantive portions of a number of DOD contracts, including 25 
contracts listed in the third bullet point of paragraph 7 of the European Union's letter dated 
9 September 2013. The European Union alleges that the redactions, which include dollar fig ures, 
descriptions of work to be performed, and in some instances, the whole contract prior to a certain 
modification, prevent the European Union from assessing the United States' characterizations of 
those contracts.69 
2.27.  The United States responds tha t the European Union's attempt to justify its request is far 
too vague to support a conclusion that the information is either necessary or appropriate to 
request. First, the European Union does not specify which redactions in which documents relate to 
its request, or explain why such redacted material is relevant to the matter before the Panel. 
Secondly, the European Union does not specify the number of documents it covers. In addition, 
the United States asserts that neither party discussed any of these DOD  contracts in its written 
submissions, and that none is even cited in the parties' written submissions, other than the KC -46 
RDT&E contract (US13 -721(HSBI)) which is cited in footnote 551 to the United States' second 
written submission.70 Accordingly, there  are no relevant US characterizations of these contracts for 
the European Union to "assess".  
2.28.  In its comments on the United States' response, the European Union argues that the fact 
that it did not discuss the redacted contracts in its written submis sions is evidence of the fact that 
the European Union cannot discuss the substance of material that has been withheld from it. It 
does not excuse the United States from being required to provide the information. Moreover, the 
United States makes broad asse rtions about the alleged inapplicability to large civil aircraft of work 
done under DOD contracts, and argues that this is demonstrated by the contracts. The 
United  States cannot then claim that there is no need for the Panel to assess this characterizatio n. 
To do so would be seeking a "reverse adverse inference" that the redacted information shows what 
the United States asserts it would show.71 As to the United States' criticisms concerning the 
European Union's failure to provide a comprehensive listing of specific redactions, the European 
Union notes that the United States does not address the redactions that the European Union did 
specifically list. The European Union asserts moreover, that the United States has not always 
clearly indicated when certain in formation was redacted, and submits that the United States, 
rather than the European Union, is best positioned to provide a comprehensive listing and 
explanation of redactions it has made in its HSBI documents.72 
2.29.  The European Union does not dispute t hat the United States has not referred to any of the 
contracts listed by the European Union in bullet point 3 of paragraph 7 of its letter of 
9 September  2013, other than a reference in footnote 551 of its second written submission to Air 
force Contract FA 8625-11-C-6600 (produced in the Article 13 process as document US13 -721 
(HSBI)). In its second written submission, the United States asserts that the KC -46 program is 
                                               
69 European Union's letter dated 9 September 2013, para. 7, third bullet point.  
70 United States' response dated 16 September 2013, para. 12.  
71 European Union's comments on the US response dated 23 September 2013, para. 14.  
72 European U nion's comments on the US response dated 23 September 2013, para. 13.  WT/DS353/RW/ Add.1  
 
- F-11 - 
 
 purchasing new aerial refuelling tankers to replace aging existing equipment, indicating that it is a 
purchase of goods.73 In that context, it refers to Air force Contract FA8625 -11-C-6600. The 
European Union has not indicated which redacted portions of this contract the United States should 
be required to provide in order to enable the Europea n Union and the Panel to assess the 
United  States' characterisation of this contract.  
2.30.  We have reviewed the version of Air Force Contract FA8625 -11-C-6600 submitted in the 
Article 13 process as document US13 -721(HSBI). Based on this review and our u nderstanding of 
the parties' arguments and evidence presented thus far, we are not convinced that it is necessary 
or appropriate for the Panel to request the United States to produce the redacted portions of this 
contract. However, we do not preclude the p ossibility that, as our examination proceeds, we may 
conclude that we require access to at least some redacted portions of this contract in order to 
objectively characterize the DOD procurement contracts funded through the "military aircraft" 
program eleme nts of the RDT&E program.  
2.31.  The Panel has reviewed the other instruments identified by the European Union in the third 
bullet point of paragraph 7 of its letter of 9 September 2013. We are not persuaded that it is 
necessary and appropriate to request  the United States to produce all redacted portions of all of 
the contracts in order to enable the European Union to assess the "US characterisations of these 
contracts". Nor has the European Union pointed to the specific parts of the United States' 
submis sions in which the United States purports to characterize DOD contracts or assistance 
instruments in order to show why, even if the United States did not specifically refer to the 
contracts at issue, it is nonetheless necessary and appropriate to require t he United States to 
produce all or some of the redacted portions of those contracts. We are therefore unable to 
conclude that it is necessary and appropriate for the Panel to seek this information from the 
United  States at this time. The Panel accordingly declines to request this information at 
this time  (which does not preclude us from revisiting this request in the future).  
2.4  NASA, DOD and FAA technical reports  
2.32.  The European Union requests the Panel to ask the United States to provide it and th e 
European Union with a number of NASA, DOD and FAA technical reports which the United States 
has allegedly withheld on the basis of alleged access restrictions (including export controls), 
restrictions to government or government contractors, or because t hey are marked "proprietary".74   
2.33.  The United States disputes that it has withheld the documents now sought by the 
European  Union on the basis of access restrictions. With respect to the NASA and DOD technical 
reports, the United States refers to the explanation in its Article 13 response of 28 February 2013 
that it would not be feasible to review these documents for export -controlled information, in light 
of their volume and highly complex subject matter. The United States submits that such a process 
is no more feasible now and that to undertake such a task at this stage of the proceeding would 
consume significant time and resources and prevent the United States from preparing effectively 
for the substantive meeting with the parties.75 The United States  notes that while the 
European  Union complained in its submissions that it did not have access to the NASA technical 
reports, it did not renew its request for these documents or assert that the United States was 
being uncooperative in not providing them.76 As to the FAA technical reports, the United States 
asserts that it provided all 60 of the documents in question on 22 March 2013, and notes that the 
European Union submitted certain of them as exhibits to its second written submission.  
2.34.  In its commen ts on the United States' response, the European Union expresses appreciation 
for the United States' clarification that it has provided all of the FAA technical reports. However, it 
notes that the United States attempts to explain withholding NASA and DOD t echnical reports only 
on the basis of export controls, and does not offer any explanation or justification for withholding 
                                               
73 United States' second written submission, para. 405. See also United States' first written submission, 
paras. 451 -457 for a description of the history of the bidding process for the fl eet of refuelling tankers to 
replace the KC -135s.  
74 European Union's letter to the Panel dated 9 September 2013, para. 7, fourth bullet point. The 
withheld NASA reports are identified in Exhibit US -23, the withheld DOD reports are identified in document 
US13-317, and the existence of the withheld FAA reports is indicated in paras. 105 -106 of the United States' 
response to the Panel's request for information pursuant to Article 13 of the DSU dated 28 February 2013.  
75 United States' response dated 16 Septembe r 2013, para. 13.  
76 United States' response dated 16 September 2013, para. 13 at footnotes 20, 21.  WT/DS353/RW/ Add.1  
 
- F-12 - 
 
 such reports on the grounds of restriction to government or government contractors, or because 
they are marked "proprietary". Moreove r, while the United States asserts that it was not feasible 
to review the technical reports for export -controlled information, it does not explain why it 
continued to review and eventually provide the FAA technical reports after the Panel's original 
deadli ne of 28 February 2013, but has not done so for the NASA and DOD reports.77 Finally, the 
European Union notes that the Panel has already requested this information in the context of its 
Article 13 request.78 
2.35.  The Panel recalls that its Article 13 reque st sought (a) copies of all final scientific and 
technical reports ( or the full name and identification number of each report requested) pertaining 
to the NASA contracts and agreements previously requested,79 (b) copies of technical reports 
pertaining to th e DOD contracts, task/delivery orders and non -procurement instruments previously 
requested, and (c) copies of all technical reports pertaining to Boeing's work under the FAA CLEEN 
program.80 In its response to the Panel's Article 13 request, the United Stat es provided a list of 
NASA technical reports (which purported to provide the requested information to the extent that 
the relevant reports could be identified in the time available).81 It provided a listing of available 
DOD technical reports by accession nu mber for obtaining the report from the Defense Technology 
Information Center, advising that most of the reports contain detailed information about weapons 
technologies that are export -controlled or otherwise restricted and indicating that it had been 
impos sible for the United States to review them in the time available.82 The United States also 
provided internet links to nine DOD technical reports that are not export -controlled.83 Finally, the 
United States provided copies of four publicly -available technical  reports pertaining to the FAA 
CLEEN program, and indicated that it would provide additional reports following review of 
confidential technical reports for BCI/HSBI and export controls.84 The United States provided 
additional FAA CLEEN technical reports in a submission on 22 March 2013.85 
2.36.  The Panel's Article 13 request also sought a list describing all technical data developed by 
Boeing in the course of work performed under the relevant NASA R&D programs and DOD RDT&E 
program elements, indicating the p rogram or program element, and contract, grant or agreement 
under which the data was developed as well as applicable data rights policies.86 In response to 
these requests, the United States referred to its list of NASA technical reports as identifying 
repor ts that describe any data developed under NASA procurement contracts, SAAs or 
agreements. The United States indicated that each report listed indicates the contract or 
agreement that funded the work under which new data were developed and referred to a fur ther 
document setting forth the data rights policies applicable to such data.87 With regard to DOD, the 
United States referred to its list of DOD Cooperative Agreements, TIAs and OTAs and its DOD 
Contract List. It also referred to its list of DOD technical reports as identifying reports that describe 
data developed under contracts or agreements and notes that in most cases, the entire report is 
either export controlled or otherwise subject to distribution restrictions. It advises that the 
                                               
77 European Union's comments on the US response dated 23 September 2013, para. 16.  
78 European Union's comments on the US response dated 23 September 2013, par a. 17.  
79 The request asked for the actual NASA technical reports, or the full name and identification number of 
each report, rather than a link to a single website that gathers all NASA reports.  
80 Request to the United States pursuant to Article 13 of the DSU dated 5 December 2012, 
questions.  10(a) and 29; Request to the United States pursuant to Article 13 of the DSU dated 
18 December  2012, para.  40. 
81 United States' response to the Panel's request for information pursuant to Article 13 of the DSU dated 
28 February 2013, para. 22. The list was submitted as document US13 -0312 which was revised on 
22 March  2013.  
82 United States' response to the Panel's request for information pursuant to Article 13 of the DSU, 
dated 28 February 2013, para. 58. See document US 13-0317 (revised).  
83 United States' response to the Panel's request for information pursuant to Article 13 of the DSU dated 
28 February 2013, paras. 58 and 59.  
84 United States' response to the Panel's request for information pursuant to Article 13 of the DSU dated 
28 February 2013, para. 105.  
85 United States' letter to the Panel dated 22 March 2013, regarding submission of additional information 
with respect to que stion 40(f) of the Panel's Article 13 request.  
86 Request to the United States pursuant to Article 13 of the DSU dated 5 December 2012, para. 20.  
87 United States' response to the Panel's request for information pursuant to Article 13 of the DSU dated 
28 Feb ruary 2013, paras. 41 -42. WT/DS353/RW/ Add.1  
 
- F-13 - 
 
 research descriptio ns in the contracts and agreements themselves are the best available 
description of the technical data developed by Boeing in the course of work performed.88 
2.37.  It appears that the FAA technical reports are no longer at issue as the United States has 
clarified that it has provided those reports.  
2.38.  Although the European Union states that the withheld NASA technical reports are identified 
in Exhibit US -23, this exhibit appears to list NASA contracts and agreements. It is not clear to us 
how we are to identify, from this exhibit, the NASA technical reports that have allegedly been 
withheld by the United States. We have consulted document US13 -312(revised) which provides a 
list of NASA technical reports, indicating the report title, report identification  number and noting 
restrictions on distribution. This list identifies approximately 66 technical reports, of which seven 
are classified or subject to ITAR restrictions, six are considered proprietary or subject to limited 
distribution, and approximately 13  were in the process of pre -publication internal review. We note 
that the Panel did not specifically request copies of the NASA technical reports in the Article 13 
process, and that the United States appears to have complied with question 10(a) of the Arti cle 13 
request by providing a listing of the name and identification number of each report.  
2.39.  As to the DOD technical reports at issue, we note that document US13 -317 lists 140 
technical reports by accession number, but that only eight are listed as c ontaining no distribution 
limitations. The vast majority contain export -controlled information.  
2.40.  We are aware that technical reports can sometimes be several hundred pages in length89 
and that it could be an extremely time and resource intensive task  to undertake the sort of review 
that would make it possible to produce copies of those reports for the Panel and the 
European  Union within any reasonable time -frame. While we can imagine that the information 
contained in the technical reports is potential ly relevant to the Panel's consideration of the parties' 
arguments concerning technology effects of the NASA and DOD aeronautics R&D measures in 
particular, the European Union has not advanced any reasons why it is necessary and appropriate 
for the Panel t o require the United States to produce these at this point in the proceeding, nor has 
it pointed to any place in its submissions where it has identified a need for such information.90 We 
are reluctant to make a request of this volume and complexity at this stage of the proceeding in 
the absence of a more particularized explanation from the European Union as to why we should 
request the United States to provide each technical report and how the information in question is 
likely to be necessary to the Panel's assessment of the matter.  
2.41.  The Panel does not preclude the possibility that, as its examination of the parties' 
arguments and evidence proceeds, it may conclude that it requires the United States to provide 
certain technical reports in order to be ab le to evaluate the parties' arguments as to the 
applicability of technologies developed under certain NASA and DOD programmes to large civil 
aircraft. However, it does not consider it necessary or appropriate to do so at this stage of the 
proceeding. The P anel therefore declines to make this request at this time.  
                                               
88 United States' response to the Panel's request for information pursuant to Article 13 of the DSU 
28 February 2013, paras. 75 -78. 
89 For example, the DOD technical report submitted as document US13 -0321 is 531 pages long.  
90 Indeed , the European Union argues in its submissions that, contrary to the United States' assertions 
that the data developed in the course of Boeing's NASA -supported research is available in NASA technical 
reports, many of these technical reports are in fact not  made public, in whole or in part, European Union's 
second written submission, paras. 195, 210.  The European Union uses the United States' lists of NASA and 
DOD technical reports provided in response to the Panel's Article 13 request to support its asserti on that many 
NASA and DOD technical reports provide for only limited disclosure, European Union's second written 
submission, paras. 196 referring to Exhibit EU -214 and European Union's first written submission, paras. 143 
and 318, referring to Exhibit EU -354. Moreover, we note that in its first written submission, the 
European  Union requests the Panel to adopt inferences, as appropriate, based on the United States' responses 
to questions 20 and 35 of the Panel's Article 13 request, that Boeing is developing  highly valuable LCA -related 
data through the challenged NASA R&D programmes and DOD RDT&E programme elements, maintains rights 
over such data, and that "much of that data never sees the light of day."  European Union's first written 
submission, paras. 144 and 319.  WT/DS353/RW/ Add.1  
 
- F-14 - 
 
 2.5  NASA new technology reports  
2.42.  The European Union requests the Panel to ask the United States to provide it and the 
European Union with 25 NASA "new technology reports" which the United St ates claims in its 
second written submission to have provided, but which it has not provided.91 
2.43.  The United States argues that the requested information is not necessary to the Panel's 
assessment of the matter before it, and that it is not appropriate  to seek such information at this 
stage of the proceeding, given the resources that it would require.92 
2.44.  With respect to the NASA new technology reports, the Panel had requested the 
United  States to provide, for each of the NASA contracts, SAAs and ot her agreements involving 
Boeing under specifically listed NASA R&D programs "records indicating the new technologies 
developed in the performance of the work."93 In response to this request, the United States 
advised that every NASA contract requires contra ctors to submit a "New Technology Report" for 
any new technologies developed in the performance of work under such contracts, and provided a 
document listing the technologies reported to NASA with respect to the relevant contracts, SAAs 
and agreements.94  
2.45.  While the parties disagree as to whether the United States claims in its second written 
submission to have provided the NASA new technology reports,95 it appears that the parties agree 
that the United States has not in fact submitted the NASA new tech nology reports. Our Article 13 
request sought "records" indicating new technologies developed under the particular NASA 
contracts. It is not clear that the United States has fully complied with this request by providing a 
listing of the technologies report ed to NASA under the relevant contracts.  
2.46.  We note that the European Union does not advance any reason why it is necessary and 
appropriate to request the United States to provide this information "without delay" beyond its 
understanding that the Unite d States had represented at paragraph 152 of its second written 
submission that it had provided those reports, a representation which the United States denies 
making. In any case, we consider that information concerning new technologies developed by 
Boeing  in the performance of its work for NASA under the relevant contracts and agreements is 
potentially relevant to the Panel's consideration of the parties' arguments concerning the 
technology effects of the NASA aeronautics R&D measures and that it is approp riate for us to make 
this request to the United States subsequent to the meeting with the Panel.  
2.47.  Accordingly, we have decided to seek this information from the United States, 
through a request pursuant to Article 13 of the DSU, which we intend to m ake 
subsequent to the meeting with the parties.     
2.6  Sales campaign -related documents  
2.48.  In an HSBI attachment to its letter of 9 September 2013, the European Union requested the 
Panel to seek documents concerning eight particular LCA sales campai gns on the basis that such 
information would have been responsive to elements of question 87 of the Panel's Article 13 
request to the United States. The first three categories of LCA sales campaign -related information 
sought by the European Union involve m emoranda of understanding for three LCA sales campaigns 
that are alleged to pre -date the documents provided in response to question 87(b) of the Panel's 
Article 13 request. The next four categories seek attachments to the final offer materials provided 
in respect of four LCA sales campaigns which cover delivery positions and pricing and which the 
European Union alleges would have been responsive to subparagraphs (b) and (d) of question 87. 
The final category seeks information regarding the expected delivery  dates for LCA orders of a 
particular airline which was not provided in Exhibit US -547.  
                                               
91 European Union's letter to the Panel dated 9 September 2013, para. 7 fifth bullet point.  
92 United States' response dated 16 September 2013, para. 14.  
93 Request to the United States pursuant to Article 13 of the DSU dated 5 December 2012, para. 1 0(d). 
94 United States' response to the Panel's request for information pursuant to Article 13 of the DSU, 
para. 25. 
95 European Union's letter to the Panel dated 9 September 2013, para. 7 fifth bullet; United States' 
response dated 16 September 2013, para. 14. WT/DS353/RW/ Add.1  
 
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 2.49.  Question 87 of the Panel's Article 13 request had sought, among other things, information 
concerning Boeing's initial and final offers and the terms, conditions , prices and concessions of 
those offers with respect to LCA ordered (and options, purchase or other rights) in specified LCA 
sales campaigns.96 On 22 March 2013, the United States responded to this request by submitting 
HSBI documents designated US -13-453 through US -13-547.97  
2.50.  The United States argues that none of the information sought by the European Union 
appears to be necessary for the Panel to assess the matter before it, and that the European Union 
has "barely discussed" the large volume of sale s campaign -related information that the 
United  States has provided in response to the Panel's Article 13 request.98 The United States 
considers it highly doubtful that adding similar kinds of documents or additional data points to an 
already large and mostl y undiscussed body of information would assist the Panel in assessing the 
matter before it.  
2.51.  In its comments on the United States' response, the European Union disputes the 
United  States' assertion that it has barely discussed the sales campaign -related information 
previously provided by the United States in response to the Panel's Article 13 request. The 
European Union does not "ignore" a document when it decides, after careful analysis, that a 
reference to it is not required.99 Nor is it for the Unit ed States to unilaterally decide that 
information previously requested by the Panel under Article 13 of the DSU is irrelevant to the 
issues in these proceedings.100  
2.52.  The Panel notes that the European Union discusses the LCA sales campaigns the subject  of 
this information request in the parts of its submissions dealing with serious prejudice. We consider 
that the information in question, relating directly to delivery positions, pricing and other terms and 
conditions of specific LCA sales campaigns at is sue in this proceeding is necessary in order for the 
Panel to assess the European Union's serious prejudice allegations. While we acknowledge the 
highly commercially sensitive nature of the information in question, we note that the Panel has 
adopted the HS BI/BCI Procedures precisely in order to protect information of this sort.  
2.53.  We therefore consider it appropriate that we renew our request that the United States 
provide this information. Given the proximity of the meeting with the parties, and the c oncern 
expressed by the United States that requests for information at this time would interfere with the 
United States' preparation for the meeting, the Panel has decided that it will make this request 
subsequent to the meeting with the parties.     
3  REQUESTS INVOLVING INF ORMATION NOT PREVIOU SLY THE SUBJECT OF T HE 
PANEL'S ARTICLE 13 R EQUEST  
3.1.  We now consider the merits of the European Union's requests that the Panel ask the 
United  States to provide information that was not previously the subject of a n Article 13 request 
by the Panel. Although the parties have not specifically identified which information they consider 
to be information that has not been previously requested by the Panel pursuant to Article 13 of the 
DSU, the Panel considers that the U nited States was not specifically required to produce the 
following information in the context of the Panel's Article 13 request of December 2012:  
a. the Vought -Boeing Asset Purchase Agreement submitted by the United States as Exhibit 
US-325; and  
b. the redacted portions of a Boeing Board of Directors' slide presentation entitled "Gemini 
Update" submitted by the United States as Exhibit US -323. 
                                               
96 Request to the United States pursuant to Article 13 of the DSU dated 18 December 2012, 
question  87. 
97 United States' letter to the Panel dated 22 March 2013, regarding submission of information with 
respect to question 87 of the Panel's Article 13 re quest.  
98 United States' response dated 16 September 2013, paras. 19 -20. 
99 European Union's comments on the United States' response dated 23 September 2013, paras. 24 -25. 
100 European Union's comments on the United States' response dated 23 September 2013, pa ra. 23.  WT/DS353/RW/ Add.1  
 
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 3.1  The Vought -Boeing Asset Purchase Agreement  
3.2.  The European Union requests the Panel to ask the United Sta tes to provide the 
European  Union and the Panel with the full version of the Vought -Boeing Asset Purchase 
Agreement in order to enable the European Union and the Panel to assess the United States' 
claims, such as those made at paragraphs 492 and 501 of its  second written submission, as to 
what the Agreement did and did not do.101 
3.3.  The United States refers to the Vought -Boeing Asset Purchase Agreement in its second 
written submission in the context of discussing the factual background to Boeing's involvem ent in 
Project Emerald.102 The United States submitted as Exhibit US -325 what appears to be a public 
filing of the text of the Vought -Boeing Asset Purchase Agreement with the US Securities and 
Exchange Commission. Accordingly, the public version of the Agree ment does not include the 
various exhibits and disclosure schedules to the Agreement.  
3.4.  The United States explains that it did not provide the exhibits or schedules to the Agreement 
because they do not appear to be necessary to understand the issues di scussed in the parties' 
submissions.103 The United States argues that the European Union has not identified any reason to 
consider such information necessary to the Panel's evaluation of the issues before it. For example, 
all of the information in the releva nt paragraphs of the United States' second written submission is 
fully supported by the cited portions of Exhibit US -325, which provides all of the information 
necessary to evaluate the United States' assertions.  
3.5.  The European Union argues that the Un ited States' assertions are contradicted by the 
withheld portions of the Agreement. The European Union identifies one example: While 
paragraph  492 of the United States' second written submission states that Boeing acquired 
Vought's interest in all assets, properties and rights of every kind (whether tangible or intangible), 
including real and personal property, in South Carolina, the Agreement indicates that there were a 
number of exceptions and exclusions set forth in schedules to the Agreement, along with  exhibits 
that are relevant to understanding what the Agreement "did and did not do".104  
3.6.  The Vought -Boeing Asset Purchase Agreement filed as Exhibit US -325 indicates that the 
Agreement included 16 exhibits, one appendix and 86 disclosure schedules. It  was submitted as 
evidence to support the United States' assertions, in paragraph 492 of its second written 
submission outlining "key facts" regarding Project Emerald that Boeing had, through a series of 
transactions in 2008 and 2009, purchased Vought and Global Aeronautica's South Carolina 
operations.  
3.7.  The Panel is not persuaded at this point in the proceeding that it is necessary and appropriate 
to request the United States to produce the full version of the Vought -Boeing Asset Purchase 
Agreement, wh ich includes schedules and exhibits which are unlikely to be of relevance to issues 
before the Panel in this proceeding. However, we have decided to request the United States 
to produce certain disclosure schedules and exhibits that do appear to us to be r elevant 
to our assessment. These documents are Schedules 2.2(b)(viii) and 2.2(a)(ii), and 
Exhibits I and J. We intend to make this request to the United States following the 
meeting with the parties.  
3.2  The redacted portions of the "Gemini Update" prese ntation  
3.8.  The European Union requests the Panel to ask the United States to provide it and the 
European Union with the redacted portions of a Boeing slide presentation dated 19 October 2009 
                                               
101 European Union's letter to the Panel dated 9 September 2013, para. 7 sixth bullet point.  
102 United States' second written submission, paras. 492 and 501.  
103 United States' response dated 16 September 2013, at footnote 25.  
104 European Union's comment s on the United States response dated 23 September 2013, para. 20. The 
European Union provides as examples, Section 2.2(a)(vii) (which refers to Schedule 2.2(b)(viii) concerning 
governmental authorizations that were not part of the purchased assets), Secti on 2.2(b) (dealing with excluded 
assets which refers to Schedule 2.2(b)(viii) as well as Schedule 2.2(a)(ii) concerning tangible personal property 
of Vought that would not be retained by Vought), and Section 9.1(e) (which provides for Vought to deliver a 
number of documents as a condition to closing and in that regard refers to the forms of those documents set 
forth in 15 exhibits).  WT/DS353/RW/ Add.1  
 
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 entitled "Gemini Update" (Exhibit US -323). The European Union considers that the redacted slides 
in Exhibit US -323 likely contain evidence as to the existence and value of the alleged South 
Carolina subsidies.105 
3.9.  The United States referred to page 6 of this exhibit in its second written submission in 
support of i ts assertion that factors other than the existence of Project Gemini influenced Boeing's 
decision to locate its second 787 assembly line in South Carolina.106 The United States says that, 
while it cited only to page 6 of the document in its second written su bmission, it submitted the rest 
of the document for the sake of completeness.107 The United States argues that none of the 
information in the remainder of Exhibit US -323 is necessary for the Panel to assess the matter 
before it, which it considers is support ed by the European Union's own conduct. The United States 
alleges that, before initiating this compliance proceeding, the European Union apparently accessed 
the document online, and identified the portion that appeared relevant; namely, slide NLRB -
004283 a nd asked the Panel to request an unredacted copy of this slide from the United States. 
The United States previously complied with this request by submitting this slide as US13 -
0658(BCI) in the context of its response to the Panel's Article 13 request.108 According to the 
United States, the fact that the European Union initially requested only one other slide in the 
document indicates that it does not consider the other information to be necessary to the Panel's 
analysis.  
3.10.  In its comments on the United S tates' response, the European Union takes issue with the 
suggestion that the fact that the European Union initially requested only one other slide in this 
document in the Annex V/Article 13 process demonstrates that the European Union does not 
consider the  other information to be relevant. The European Union argues that, at the time of the 
Annex V/Article 13 process, it had only sought those documents that it expected to be relevant at 
the time , and of which it was aware .109 The European Union further alleges  that, while the version 
of the document provided by the United States is one which was released publicly by a Boeing 
labor union, its source from the slide titles "NLRB" appears to be the National Labor Relations 
Board, a US government agency and that it is therefore likely that the United States is in 
possession of an unredacted copy of the document that it could have provided to the Panel. This is 
further supported by the fact that the United States was previously able to make an unredacted 
version of on e slide available to the Panel and to the European Union.110  
3.11.  Exhibit US -323 is a slide presentation that consists of nine pages in total. Pages 1, 8 and 9 
are merely title and discussion/conclusion pages which do not contain any substantive informati on. 
Pages 2, 6, 7 do not appear to have been redacted. Page 3 is redacted, however, the European 
Union has been provided this slide as document US13 -0658(BCI) in response to the Panel's 
Article  13 request and we see no reason to ask the United States to pr ovide a document it has 
already provided. Pages 4 and 5 are also redacted. They appear to present Boeing's estimate of 
the cash impact of a Charleston second assembly line compared with an interim assembly line in 
Everett and an estimate of labor -related e xpenditures, in both cases, tied back to estimated 
impacts on NPV. It appears to us that the information on pages 4 and 5 of Exhibit US -323 are 
potentially relevant to assessing the subsequent discussion of the "pros and cons" of locating a 
second assembly  line in South Carolina and the United States' argument that factors other than 
the existence of Project Gemini influenced Boeing's decision in that regard. Accordingly, the 
Panel intends to request the United States to produce pages 4 and 5 of Exhibit US -323 
following the meeting with the parties.  
__________  
 
                                               
105 European Union's letter to the Panel dated 9 September 2013, para. 7 seventh bullet point.  
106 United States' second written s ubmission, para. 91.  
107 United States' response dated 16 September 2013, para. 16.  
108 United States' response dated 16 September 2013, para. 17. See also Letter of the United States to 
the Panel dated 22 March 2013, regarding document US -13-0658(BCI).  
109 European Union's comments on the US response dated 23 September 2013, para. 20 footnote 36.  
110 European Union's comments on the US response dated 23 September 2013, para. 22.