WT/DS316/29  
 
26 October  2016 
(16-5858) Page: 1/5 
  Original: English  
 
 EUROPEAN COMMUNITIES  AND CERTAIN MEMBER S TATES – MEASURES AFFECTING 
TRADE IN LARGE CIVIL  AIRCRAFT  
RECOURSE TO ARTICLE 21.5 OF THE DSU BY T HE UNITED STATES  
NOTIFICATION OF AN A PPEAL BY THE EUROPEAN UNION  
UNDER ARTICLE 16.4 A ND ARTICLE 17 OF THE  UNDERSTANDIN G ON RULES  
AND PROCEDURES GOVER NING THE SETTLEMENT OF DISPUTES (DSU),  
AND UNDER RULE 20(1)  OF THE WORKING PROCE DURES FOR APPELLATE REVIEW  
The following communication, dated 13 October  2016, from the dele gation of the European Union , 
is being circulated to  Members.  
 
_______________  
 
Pursuant to Article 16.4 and Article 17.1 of the DSU, the European Union hereby notifies to the 
Dispute Settlement Body its decision to appeal to the Appellate Body certain issues of law covered 
in the Panel Report and certain l egal interpretations developed by the Panel in the dispute 
European Union – Measures Affecting Trade in Large Civil Aircraft (Recourse to Article 21.5 of the 
DSU by the United States)  (WT/DS316/RW).  Pursuant to Rule 20(1) of the Working Procedures for 
Appellate Review , the European Union simultaneously files this Notice of Appeal with the 
Appellate  Body Secretariat.  
The European Union is restricting its appeal to those errors that it believes constitute serious 
errors of law and legal interpretation that n eed to be corrected.  Non -appeal of an issue does not 
signify agreement therewith.   
For the reasons to be further elaborated in its submissions to the Appellate Body, the European 
Union appeals, and requests the Appellate Body to reverse, modify or declar e moot and of no legal 
effect, the findings, conclusions and recommendations of the Panel, with respect to the following 
errors of law and legal interpretations contained in the Panel Report1: 
I. WHETHER THE PANEL PR OPERLY INTERPRETED A RTICLE 7.8 OF THE 
SCM AGREEMENT (SECTIONS 6 .6.2 AND 6.6.3 OF TH E REPORT)  
1. The Panel erred in interpreting Article 7.8 of the SCM Agreement  to require an 
implementing Member to “remove the adverse effects” found from an actionable subsidy in 
original proceedings, even if that subs idy has been “withdraw{n}” and is no longer 
“maintain{ed}”.2 
2. The Panel additionally erred in its interpretation of Article 7.8 (in conjunction with 
Article  1.1(a))  of the SCM Agreement ) when finding that bringing about the end of a 
                                                
1 Paragraph numbers provided in footnotes to the following  description of the errors of the Panel are 
intended to indicate the primary instance of the errors. These errors have consequences throughout the report, 
and the European Union also appeals all findings and conclusions deriving from or relying on the appe aled 
errors, and in particular the relevant findings and conclusions in Sections 7.1, 7.2, 7.3 and 7.4 of the Panel 
Report.  
2 Panel Report, paras. 6.803, 6.813, 6.819, 6.822, 6.838, 6.839 -6.841, 6.1078, 6.1089, 6.1094, 
6.1100, 6.1101 -6.1102, 6.1451 -6.1452,  6.1463, 6.1534, 6.1774, 6.1798, 6.1817, 6.1838, 6.1846, 6.1847, 
7.1(d)(i), 7.1(d)(viii), 7.1(d)(ix), 7.1(d)(xii) -(xvii) and 7.2.  WT/DS316/29  
 
- 2 - 
 
  financial contribution d oes not result in withdrawal of the subsidy.3  The European Union 
requests the Appellate Body to consider this appeal only if the Appellate Body reverses the 
Panel’s interpretation of Article 7.8 and attempts to complete the analysis under a proper 
interpr etation of Article 7.8.  
II. WHETHER THE PANEL ER RED BY REFUSING TO A SSESS WHETHER THE EU ROPEAN 
UNION ACHIEVED COMPL IANCE IN RESPECT OF THE MÜHLENBERGER LOC H AND 
BREMEN AIRPORT RUNWA Y SUBSIDIES (SECTION S 5.10, 6.2.5 AND 6. 6.3.4.4 OF 
THE REPORT)  
3. The Panel erred in interpreting Article 21.5 of the DSU as providing an original respondent 
with the right to seek findings of compliance in Article 21.5 compliance proceedings only in 
the narrow factual circumstances of the US/Canada – Continued Suspension  dispute.4   
4. The Panel erred in the application of Article 21.5 of the DSU by finding that no 
disagreement, within the meaning of Article 21.5 of the DSU, existed between the 
European Union and the United States, and consequently by failing to make findings 
concerning th e European Union’s withdrawal of the Mühlenberger Loch and Bremen airport 
runway subsidies .5   
5. Separately, by declining to make findings on a matter that was properly before it, the 
Panel failed to make an objective assessment of the matter, under Article 11 of the DSU.6  
III. WHETHER LA/MSF FOR T HE A350XWB IS A SUBS IDY (SECTION 6.5.2 O F THE 
REPORT)  
6. The Panel erred when identifying the appropriate point in time from which to draw the 
corporate borrowing rate component  of the market benchmark to determine whether  each 
A350XWB launch aid/member state financing (“LA/MSF”) contract confers a “benefit”, and 
therefore constitutes a subsidy, under Article 1.1(b) of the SCM Agreement .7  Specifically, 
in identifying the corporate borrowing rate as “the average yields {on the relevant EADS 
bond} one -month prior and six -months prior to the conclusion of the contract, in the form 
of a range”,8 the Panel erred in the application of Articles 1.1(b) and 7.8 of the 
SCM Agreement .9   
7. Separately, by rejecting the yield on the day o f the conclusion of each contract, the Panel 
failed to make an objective assessment of the matter, under Article 11 of the DSU.10 
8. Should the Appellate Body disagree with the European Union and reject the appeals 
described in paragraphs 6 and 7, the European  Union appeals the Panel’s inclusion, in its 
construction of the corporate borrowing rate, of the six -month average yield on the 
relevant EADS bond within the Panel’s range of average yields.11  Specifically, by including 
the six -month average yield within its range, the Panel erred in the application of 
Articles  1.1(b) and 7.8 of the SCM Agreement .12 
                                                
3 Panel Report, paras. 6.1072 -6.1074,  6.1451 -6.1452, 6.1463, 6.1534, 6.1774, 6.1798, 6.1817, 
6.1838, 6.1846, 6.1847, 7.1(d)(i) , 7.1(d)(viii), 7.1(d)(ix), 7.1(d)(xii) -(xvii) and 7.2.  
4 Panel Report, paras. 5.76 -5.78, footnote 53 to para. 6.3, footnote 109 to para. 6.42, and footnote 
1847 to para. 6.1102.  
5 Panel Report, paras. 5.76 -5.78, footnote 53 to para. 6.3, footnote 109 to p ara. 6.42, and footnote 
1847 to para. 6.1102.  
6 Panel Report, paras. 5.76 -5.78, footnote 53 to para. 6.3, footnote 109 to para. 6.42, and footnote 
1847 to para. 6.1102.  
7 Panel Report, paras. 6.389, 6.430 ( Table 7) and 6.632 (Table 10) .   
8 Panel Report, p ara. 6.389.  
9 Panel Report, paras. 6.389, 6.430 ( Table 7) and 6.632 (Table 10) .   
10 Panel Report, paras. 6.389, 6.430 ( Table 7) and 6.632 (Table 10) .   
11 Panel Report, paras. 6.389, 6.430 ( Table 7) and 6.632 (Table 10) .   
12 Panel Report, paras. 6.389, 6.43 0 (Table 7) and 6.632 (Table 10) .   WT/DS316/29  
 
- 3 - 
 
  9. Separately, by including the six -month average yield within its range, the Panel failed to 
make an objective assessment of the matter, under Article 11 of the D SU.13 
10. Further, the Panel erred in identifying the project risk premium component  of the market 
benchmark to determine whether each A350XWB LA/MSF contract confers a “benefit”, and 
therefore constitutes a subsidy, under Article 1.1(b) of the SCM Agreement .14  The Panel 
selected a single undifferentiated project risk premium for each A350XWB LA/MSF 
contract, which was developed for a different programme (i.e., the A380) in the original 
proceedings.  In so doing, the Panel committed three sets of error.  
11. First, the Panel failed to establish a project -specific risk premium for A350XWB LA/MSF 
based on the risks associated with the A350XWB programme.  As a result, the Panel erred 
in the application of Articles 1.1(b) and 7.8 of the SCM Agreement .15   
12. Separately, by fa iling to consider more appropriate benchmarks and by deviating from the 
approach to project -specific benchmarks taken in the original proceedings, the Panel failed 
to make an objective assessment of the matter, under Article 11 of the DSU.16   
13. Second , by fa iling to establish similarity between the risks involved in the A350XWB 
project and the A380 LA/MSF project, as well as between the risks involved in the 
A350XWB LA/MSF contracts and the A380 LA/MSF contracts, the Panel failed to make an 
objective assessme nt of the matter, under Article 11 of the DSU.17   
14. Third, and finally, the Panel erroneously adopted a single project risk premium to 
benchmark all four A350XWB LA/MSF contracts.  As a result, the Panel erred in the 
application of Articles 1.1(b) and 7.8 of the SCM Agreement .18   
15. Separately, by failing to adopt a differentiated project risk premium while adopting a 
differentiated corporate borrowing rate, the Panel failed to make an objective assessment 
of the matter, under Article 11 of the DSU.19   
IV. WHETHER T HE PANEL ERRED IN ID ENTIFYING APPROPRIAT E PRODUCT MARKETS 
(SECTION 6.6.4.4 OF THE REPORT)  
16. The Panel erred in its interpretation of the term “market” in Article 6.3 of the 
SCM Agreement , as permitting two products to be placed in the same product market on 
the basis of any competition between them, rather than on the basis of the existence of 
significant competitive constraints between them.20 
17. Should the Appellate Body disagree with the European Union and reject the appeal 
described in paragraph 16 , the Panel  erred in the application of Articles 5(c), 6.3 and 
Article 7.8 of the SCM Agreement  when it identified the relevant product markets for 
                                                
13 Panel Report, paras. 6.389, 6.430 ( Table 7) and 6.632 (Table 10) .   
14 Panel Report, paras. 6.435, 6.459, 6.487, 6.492, 6.527, 6.539 -6.542, 6.579, 6.595, 6.607, 6.608 -
6.610, 6.632 (Table 10), 6.633, 6.656, 6.1798, 6.181 7, 6.1847, 7.1(c)(i), 7.1(d)(xiii) -7.1(d)(xvii) and 7.2.  
15 Panel Report, paras. 6.435, 6.459, 6.608 -6.610, 6.632 (Table 10), 6.633, 6.656, 6.1798, 6.1817, 
6.1838, 6.1846, 6.1847, 7.1(c)(i), 7.1(d)(xiii) -7.1(d)(xvii) and 7.2.  
16 Panel Report, paras. 6.435, 6 .459, 6.608 -6.610, 6.632 (Table 10), 6.633, 6.656, 6.1798, 6.1817, 
6.1838, 6.1846, 6.1847, 7.1(c)(i), 7.1(d)(xiii) -7.1(d)(xvii) and 7.2.  
17 Panel Report, paras. 6.487, 6.492, 6.527, 6.539 -6.542, 6.579, 6.595, 6.607, 6.608 -6.610, 6.632 
(Table 10), 6.633, 6.6 56, 6.1798, 6.1817, 6.1838, 6.1846, 6.1847, 7.1(c)(i), 7.1(d)(xiii) -7.1(d)(xvii) and 7.2.  
18 Panel Report, paras. 6.607, 6.608 -6.610, 6.632 (Table 10), 6.633, 6.656, 6.1798, 6.1817, 6.1838, 
6.1846, 6.1847, 7.1(c)(i) , 7.1(d)(xiii) -7.1(d)(xvii) and 7.2.  
19 Panel Report, paras. 6.607, 6.608 -6.610, 6.632 (Table 10), 6.633, 6.656, 6.1798, 6.1817, 6.1838, 
6.1846, 6.1847, 7.1(c)(i) , 7.1(d)(xiii) -7.1(d)(xvii) and 7.2.  
20 Panel Report, paras. 6.1210, 6.1211, 6.1236, 6.1280, 6.1289, 6.1292, 6.1305, 6.1320, 6.1348, 
6.138 2, 6.1362, 6.1409, 6.1416, 6.1798, 6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(xi), 7.1(d)(xiv) -7.1(d)(xvii) 
and 7.2.  WT/DS316/29  
 
- 4 - 
 
  purposes of assessing the United States’ adverse effects claims in a manner that is 
inconsistent with its own legal sta ndard .21 
18. Separately, by limiting its assessment of the existence of the relevant product markets for 
purposes of assessing the United States’ adverse effects claims to competition between 
only those products that the United States had placed in the same pro duct markets, the 
Panel failed to make an objective assessment of the matter, under Article 11 of the DSU.22 
V. WHETHER THE PANEL ER RED IN REACHING ITS FINDINGS RELATING TO  THE 
“NON -SUBSIDIZED LIKE PROD UCT” PROVISIONS OF A RTICLES 6.3, 6.4 AND  6.5 
OF THE SCM AG REEMENT (SECTION 6.6 .4.3 OF THE REPORT)  
19. The Panel erred in reaching its findings on whether there is a new matter.  Specifically, the 
Panel erred in its interpretation and application of the term “matter” in Article 11 of the 
DSU.23  The Panel also erred in  failing to make an objective assessment of the matter, 
under Article 11 of the DSU.24   
20. In addition, the Panel erred in reaching its findings on cogent reasons.  Specifically, the 
Panel erred in its interpretation and application of “security and predictab ility” within the 
meaning of Article 3.2 of the DSU as it relates to the cogent reasons rule;25 and, erred in 
failing to make an objective assessment of the matter, under Article 11 of the DSU.26  
21. Finally, the Panel erred in its interpretation and applicatio n of Articles 6.3(a), 6.3(b), 
6.3(c), 6.4 and 6.5 of the SCM Agreement .27       
VI. WHETHER THE PANEL ER RED IN FINDING ADVER SE EFFECTS (SECTION 6.6.4.4 
OF THE REPORT)  
A. EFFECTS OF LA/MSF ON  THE LAUNCH AND MARKE T PRESENCE OF AIRCRA FT 
22. The Panel erred in the inte rpretation of Article 5(c) of the SCM Agreement  in adopting a 
“but for” approach to causation that failed to consider the passage of time, and events that 
occurred during that time, and consequently attributing the current market presence of the 
A320, A330  and A380 families of aircraft to pre -A350XWB LA/MSF.28 
23. Should the Appellate Body disagree with the European Union and reject the appeal 
described in paragraph 22, the Panel erred in the application of Articles 5 (c) and 7.8 of the 
SCM Agreement  in adopting a “but for” approach to causation that failed to consider the 
passage of time, and events that occurred during that time, and consequently attributing 
the current market presence of the A320 and A330 families of  aircraft to pre -A350XWB 
LA/MSF.29 
                                                
21 Panel Report, paras. 6.1292, 6.1305, 6.1320, 6.1348, 6.1382, 6.1362, 6.1409, 6.1416, 6.1798, 
6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(xi), 7.1( d)(xiv) -7.1(d)(xvii) and 7.2.  
22 Panel Report, paras. 6.1292, 6.1305, 6.1320, 6.1348, 6.1382, 6.1362, 6.1409, 6.1416, 6.1798, 
6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(xi), 7.1(d)(xiv) -7.1(d)(xvii) and 7.2.  
23 Panel Report, paras. 6.1125 -6.1138, 6.1154, 6.1798,  6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(x), 
7.1(d)(xiv) -7.1(d)(xvii) and 7.2.  
24 Panel Report, paras. 6.1125 -6.1138, 6.1154, 6.1798, 6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(x), 
7.1(d)(xiv) -7.1(d)(xvii) and 7.2.  
25 Panel Report, paras. 6.1125 -6.1153, 6.1154, 6 .1798, 6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(x), 
7.1(d)(xiv) -7.1(d)(xvii) and 7.2.  
26 Panel Report, paras. 6.1125 -6.1153, 6.1154, 6.1798, 6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(x), 
7.1(d)(xiv) -7.1(d)(xvii) and 7.2.  
27 Panel Report, paras. 6.1125 -6.1154, 6.1 798, 6.1817, 6.1847, 7.1(d)(x), 7.1(d)(xiv) -7.1(d)(xvii) and 
7.2. 
28 Panel Report, paras. 6.1515, 6.1527, 6.1534, 6.1774, 6.1798, 6.1817, 6.1838, 6.1846, 6.1847, 
7.1(d)(xii) -7.1(d)(xvii) and 7.2.  
29 Panel Report, paras. 6.1527, 6.1534, 6.1774, 6.1798, 6.1817 , 6.1838, 6.1846, 6.1847, 7.1(d)(xii) -
7.1(d)(xvii) and 7.2.  WT/DS316/29  
 
- 5 - 
 
  24. Separately, to the extent the Panel found that LA/MSF for the A380 resulted in “direct 
effects” on the launch and market presence of the A380, the Panel failed to make an 
objective assessment of the matter, under Article 1 1 of the DSU.30 
25. The Panel additionally erred in the application of Articles 5(c) and 7.8 of the 
SCM Agreement  by attributing the market presence of the A350XWB to the “indirect 
effects” of LA/MSF for the A380.31 
26. Separately, to the extent the Panel found that  LA/MSF for the A350XWB resulted in “direct 
effects” on the launch and market presence of the A350XWB, the Panel failed to make an 
objective assessment of the matter, under Article 11 of the DSU.32 
B. FINDINGS OF DISPLACE MENT, IMPEDANCE AND LOST SALES  
27. The P anel erred in the application of Articles 5(c), 6.3 and 7.8 of the SCM Agreement  by 
failing, in its assessment of lost sales, displacement and impedance, to account for the 
differences in closeness of competition between various aircraft.33 
28. The Panel erred in the application of Articles 5(c), 6.3 and 7.8 of the SCM Agreement  by 
failing, in its assessment of lost sales, displacement and impedance, to account for 
non-attribution factors.34 
29. The Panel erred in the interpretation of Articles 6.3(a) and 6.3(b) of t he SCM Agreement  in 
finding that non -withdrawn subsidies cause “displacement and/or impedance”, thereby 
conflating the two separate forms of serious prejudice.35 
30. The Panel erred in the interpretation of Articles 6.3(a) and 6.3(b) of the SCM Agreement  as 
permitting findings of “displacement” without any assessment of sales volume and market 
share data .36   
31. In addition, the Panel also erred in the application of Articles 5(c), 6.3(a), 6.3(b) and 7.8 
of the SCM Agreement  by finding “displacement” without any ass essment of sales volume 
and market share data .37 
32. The Panel erred in the interpretation of Articles 6.3(a) and 6.3(b) of the SCM Agreement  as 
permitting findings of “impedance” without any assessment of sales volume and market 
share data .38   
33. In addition, the  Panel also erred in the application of Articles 5(c), 6.3(a), 6.3(b) and 7.8 
of the SCM Agreement  by finding “impedance” without any assessment of sales volume 
and market share data .39 
 
 
__________  
                                                
30 Panel Report, paras. 6.1507, 6.1798, 6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(xii) -7.1(d)(xvii) and 
7.2. 
31 Panel Report, paras. 6.1747, 6.1771, 6.1773, 6.1774, 6.1798, 6.1817, 6.1838, 6.1846, 6.1847, 
7.1(d)(xiii) -7.1(d)(xvii) and 7.2.  
32 Panel Report, paras. 6.1717, 6.1798, 6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(xiii) -7.1(d)(xvii) and 
7.2. 
33 Panel Report, paras. 6.1798, 6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(xiv) -7.1(d)(xvii) and 7.2.  
34 Panel Report , paras. 6.1798, 6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(xiv) -7.1(d)(xvii) and 7.2.  
35 Panel Report, paras. 6.1817, 6.1838, 6.1846, 6.1847,  7.1(d)(xiv) -7.1(d)(xvii) and 7.2.  
36 Panel Report, paras. 6.1817, 6.1838, 6.1846, 6.1847,  7.1(d)(xiv) -7.1(d)(xvii) and 7.2. 
37 Panel Report, paras. 6.1817, 6.1838, 6.1846,  6.1847,  7.1(d)(xiv) -7.1(d)(xvii) and 7.2.  
38 Panel Report, paras. 6.1817, 6.1838, 6.1846, 6.1847,  7.1(d)(xiv) -7.1(d)(xvii) and 7.2.  
39 Panel Report, paras. 6.1817,  6.1838, 6.1846, 6.1847,  7.1(d)(xiv) -7.1(d) (xvii) and 7.2.