WT/DS316/R 
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ANNEX F 
 
SELECTED RULINGS OF THE PANEL CONCERNING BCI/HSBI  
PROCEDURES AND THEIR APPLICATION  
 
 
Contents Page 
Annex F-1 Communication of 13 March 2007 F-2 
Annex F-2 Communication of 15 March 2007 F-20 
Annex F-3 Communication of 30 March 2007 F-24 
Annex F-4 Communication of 24 April 2007 F-40 
Annex F-5 Communication of 30 April 2007 F-41 
Annex F-6 Communication of 23 May 2007 F-42 
 WT/DS316/R 
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ANNEX F-1 
 
COMMUNICATION OF 13 MARCH 2007 
 
European Communities and Certain Member States – Measures  
Affecting Trade in Large Civil Aircraft (DS316 ) 
 
 1. Having considered the United States' comments on the proposed non-BCI version of the 
European Communities' first written submission, and the EC's response, the Panel has reached certain 
decisions on this issue, and on certain other ma tters concerning the application of the Panel's 
BCI/HSBI Procedures in this dispute.  Because the Panel recognizes the importance of clarifying issues relating to these Procedures as soon as possible, it has decided to issue a ruling on the issue of 
designation of BCI in the EC's first written submissi on, and certain other matters, at this time.  The 
Panel is still considering other issues before it, incl uding issues relating to the designation of HSBI in 
the EC's first written submission, and will address these issues as soon as possible.    2. Before turning to the resolution of the issue of designation of BCI in the EC's first written 
submission, the Panel observes, as a general matter, that the Panel's BCI/HSBI Procedures are 
designed to protect specific information , not entire submissions or other documents.  It is for this 
reason that paragraph 4 of the BCI/HSBI Procedures  requires that the specific information designated 
as BCI/HSBI be set off within brackets (single or do uble, as appropriate)  within any given printed or 
electronic document.  This general understanding of the meaning of BCI and HSBI has implications 
with respect to the manner in which the BCI/HSBI Procedures are to be applied. 
 
(a) First, the Panel would like to clarif y that the Parties are not to present entire 
submissions or exhibits categorized as BCI or HSBI, but rather are to specifically identify, through the use of brackets as provi ded for in paragraph 4, the information 
within  those submissions or exhibits they cons ider should be so designated.  We note, 
for example, that the EC did not, in its  letter dated 6 March submitted as "BCI 
version", specifically identify through the use of brackets any specific information as 
BCI.  If a Party considers that a s ubmission or exhibit contains BCI it must  identify 
that information through the use of brackets as envisaged by paragraph 4. 
 
(b) Second, the Panel does not consider that "opinions" or "positions" may be designated 
as BCI or HSBI merely because those opi nions or positions we re expressed in 
relation to BCI or HSBI.
1  This is clear from the BCI/HSBI Procedures themselves, 
which specifically envision that "the Panel may make statements or draw conclusions that are based on the information drawn from" the BCI or HSBI (paras. 42 and 53), and further require that a Party provide on request a non-BCI or non-HSBI summary 
of BCI or HSBI sufficient to permit a reasonable understanding of the substance of 
the information (paras. 38(c)(i) and 52(d)(ii)).  Of course, the Parties must exercise caution to ensure that the "opinions" or "positions" drawn from the BCI or HSBI do 
not reveal any specific BCI or HSBI information.  This line may be a difficult one to draw in some cases, but this does not jus tify a blanket approach to designating such 
"positions or "opinions" as BCI or HSBI in their entirety. 
 
(c) Third, the BCI/HSBI Procedures clearly st ate that information can be treated as BCI 
or HSBI only if it is "not otherwise in th e public domain" (paras. 2 and 9).  The fact 
                                                     
 
1 It should be evident from the foregoing that th e Panel does not accept the view of the EC that 
personal opinions may in an d of themselves be BCI or HSBI merely because those opinions  are not in the public 
domain.   WT/DS316/R 
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that information is also found in "BCI [or HSBI ] documents" does not mean that such 
information can be treated as BCI or HSBI  if it is demonstrably and unambiguously 
available in the public domain.  The releva nt question for designation of information 
as BCI or HSBI is not the source of the information per se.    The Panel notes that the 
decision whether information is demonstr ably and unambiguously available in the 
public domain may be difficult.  Thus, th e Panel has erred on the side of caution in 
resolving the specific objections at this poin t, where it has been unable to satisfy itself 
on the basis of available information.  The Panel may revisit these objections in the future. 
 
(d) Fourth, the Panel notes the EC's concern for the protection of Boeing documents and 
its designation of such documents as BCI or HSBI.  The Panel considers, however, 
that the standard for determining whether su ch information is BCI or HSBI relates to 
the possibility of harm to the "originator" of the information, which in this case is 
Boeing, in the event of disclosure.  In our view, the originator of a document is 
entitled, through its government, to waive BCI  or HSBI status where it believes that 
disclosure of the information would not cause the requisite harm, or where it is 
prepared to accept such harm.  The Panel doubts that it would be consistent with fundamental fairness for it to rely on docu ments originated by a stakeholder where 
that stakeholder was unaware that those documents were even before the Panel because they were designated as BCI or HSBI by the other party. 
 
(e) Fifth, with respect to titles of exhibits, the Panel emphasizes its view that it is not 
documents themselves, much less the very existence of such documents, which may 
be designated as BCI or HSBI, but information within those documents.  In this light, the Panel does not believe it appropriate, as a general matter, to bracket the titles of 
exhibits as BCI and HSBI in their entirety.  If, as an exceptional matter, the title itself 
contains specific information that a Party considers to be BCI or HSBI, the Panel 
requests that the Party identify the documen t with a non-BCI/HSBI title that permits a 
reasonable understanding of the nature of the exhibit in question. 
 
(f) Finally, the Panel notes that the EC has indicated, in numerous instances, its 
willingness to re-designate certain information as non-BCI.  The Panel has accepted 
such re-designations as resolving the US objec tion with respect to the information in 
question  and appreciates the cooperative spirit shown by the EC in this respect.  
 The Panel has applied these general principles in r esolving the specific objecti ons raised by the US 
regarding designation of BCI in the EC's first writte n submission.  The Panel's specific decisions are 
set out in the attached annex, which contains BCI .  The annex also indicates those instances where the 
Panel has accepted the EC's proposed re-designation of information as non-BCI.  The Panel directs 
the EC to prepare a revised version of its first wr itten submission, reflecting the Panel's decisions and 
the re-designations proposed by the EC and accepte d by the Panel, and submit it to the Panel, and 
serve the United States, no later than close of business Thursday 15 March 2007 . 
 
3. Turning to other issues, the Panel notes the Un ited States' concern regarding the EC's decision 
to provide HSBI in the body of its submission rath er than as a separate stand-alone Appendix.  The 
EC disputes the US understanding that such a stand-alone document is required
2, but indicates its 
willingness to provide an Appendix co nsisting of the full text of the paragraphs and footnotes of the 
                                                      
2 The Panel notes, however, that the EC itself stat ed when explaining the proposed language for the 
provision that corresponds to the current paragraph 52 "the suggested language clarifies that HSBI must be 
provided separately from other parts of the written submis sion which allows the separate treatment of this part 
of the written submission as required by the rules pertaining to HSBI ."  "Note 14" in EC letter of 
29 September 2006.  (Emphasis added.)  WT/DS316/R 
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EC's first written submission in which information designated as HSBI appear s.  While the Panel does 
not consider that such an A ppendix fully satisfies the requirement for a "Full HSBI Version 
Appendix" envisaged in paragraph 52(b) of the BCI /HSBI Procedures, it considers the EC's proposal 
to be a reasonable effort to address the issue identif ied by the United States with respect to the first 
written submission.  The Panel therefore requests that  the EC prepare such an Appendix in respect of 
its first submission by close of business Thursday 15 March 2007 , in order to facilitate the first 
meeting of the Panel.3 
 4. The Panel further requests that the Parti es prepare an appropriate "Full HSBI Version 
Appendix" in respect of all future submissions to the Panel that contain HSBI, as envisaged by the 
BCI/HSBI Procedures.  In the view of the Panel, such an Appendix must be a readable document in 
its own, and not simply a compilati on of paragraphs containing HSBI.
4  
 5. With regard to the treatment of the HSBI exhibits that accompanied the EC's first written 
submission
5, the Panel realizes that there is certa in ambiguity in the BCI/HSBI Procedures.6  
However, given the fact that the US has provided an electronic copy of its HSBI Exhibit in CD form,7 
the Panel considers it fair to request the EC to subm it the HSBI exhibits in locked CD form, by close 
of business on  Thursday 15 March 2007 .  The Panel draws the attention of the EC to the fact that it 
must serve this CD in accordance with paragraph 52(g) of the BCI/HSBI Procedures.  6. The Panel notes the US request that the Pane l "permit the United States to produce one paper 
copy of the 'HSBI version' of the EC's written submission for each of its three secure sites".
8  As this 
would be a major deviation from the carefully nego tiated provisions of the BCI/HSBI Procedures, the 
Panel declines to grant this request.  7. The Panel recognizes that the application of  the BCI/HSBI Procedures implies a significant 
burden on the Parties (and on the Panel), but the Parti es were well aware that this would be the case 
when they sought such procedures.  The Pane l considers it essential that these Procedures be 
implemented in a manner that protects the legitimate ri ghts of defence of both Parties, and that allows 
the Panel to perform its work and to explain its ultimate decision in a comprehensible manner.  If 
these Procedures prove inadequate as implemented, th e Panel could be forced to re-examine them.  
The Panel further notes that the efficiency of th ese Procedures at the panel level may influence the 
views of the Appellate Body with respect to how to tr eat information in the event of an appeal.  It is 
therefore important that the Parties work together in a cooperative spirit to maintain the credibility of 
these Procedures.  
 
                                                     
 
3 Given that the issue of the designation of HSBI is unlikely to be resolved in advance of the Panel's 
first meeting, the Panel requests that the EC prepare an interim version of this Appendix on the basis of existing 
designations.   
4 Parties have already confirmed this understanding. See letters from the US and from EC dated 
17 October 2006.   
5 As requested by the US in sec tion C of its 28 February letter. 
6 For example, the Panel notes that BCI exhibits are not part of the record to which Third Parties BCI 
Approved Persons are granted access.   
7 The Panel notes that the EC did not object to such treatment of an HSBI exhibit. 
8 Cover letter of the US dated 28 February. WT/DS316/R 
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ANNEX  
 
SPECIFIC ISSUES RAISED BY THE US REGARDING DESIGNATION  
OF BCI IN THE EC'S FIRST WRITTEN SUBMISSION  
 
No. of 
paragraph CONTENT DECISION OF THE 
PANEL 
120 A summary of the European Communities' perception 
on the United States' compliance with Article 5 was 
communicated by Sir Leon Brittan, the then 
Commissioner for Trade, to his counterpart in 1997: 
[***.9 ] The Panel accepts the EC 
re-designation. 
121 In her response, Mrs. Barshevsky put forward the 
following view: 
[***10] The Panel accepts the EC 
re-designation. 
321 The amount of the levy [***].  This [***] reflects the 
fact that the effect of a manufacturer's learning curve for 
an aircraft reduces production costs and, thereby, 
increases cash on hand.11  The Panel sustains the US 
objection. 
322 After MSF debt and interest are repaid in full, 
AMs/NatCos may be required to [***] for subsequent 
aircraft deliveries.  The [***] is calculated either as 
[***12] [***] may significantly enhance an MSF 
creditor's return on its investment. With respect to information 
in the first and fourth sets of 
brackets, the Panel accepts 
the EC re-designation.  
With respect to information 
in the second set of 
brackets, the Panel sustains 
the US objection. 
336 The French government also provided [***] in MSF 
loans to support the development of the A340-500/600.13 The Panel is not prepared to 
rule on this objection at this 
time. 
337 Likewise, the Spanish government provided [***] in 
loans for the A340-500/600 variant.  The Panel is not prepared to 
rule on this objection at this 
time. 
339 To protect governments from unfavourable changes in 
interest rates, repayment obligations for the A380 are 
generally tied to variable, as opposed to fixed, rates of 
return.  The loan amounts were [***] The Panel is not prepared to 
rule on this objection at this 
time. 
364 - The Panel accepts the EC 
re-designation. 
365 - The Panel accepts the EC 
re-designation. 
                                                      
9 [***]. 
10 [***]. 
11 [***]. 
12 [***]. 
13 [***]. WT/DS316/R 
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No. of 
paragraph CONTENT DECISION OF THE 
PANEL 
366 - The Panel accepts the EC 
re-designation. 
369 and 
notes  
280-284 - 
 The Panel accepts the EC 
re-designation. 
370 - The Panel accepts the EC 
re-designation. 
371 - The Panel accepts the EC 
re-designation. 
372 - The Panel accepts the EC 
re-designation. 
note 284 Sondergutachten der Monopolkommission, at p. 71, 
Table 11, table entry "davon bis Ende 1988 ausbezahlt" for the A320 (Exhibit US-30).  The US itself notes the 
fact that disbursement had reached the level of [***] 
already in 1988 (US first written submission, p. 51, 
note 194).  
The Panel accepts the EC 
re-designation. 
377 The Spanish commitments for the A330/A340 reached 
the level of [***].  The Panel accepts the EC 
re-designation. 
The Panel understands that 
the US is not objecting to 
other BCI in this paragraph. 
378 - The Panel accepts the EC 
re-designation. 
note 356 (to para. 483, which reads:   By way of background, the 
US approach correctly conceives of MSF as a form of 
debt financing.  The Ellis report repeatedly refers to MSF as "launch aid debt" and "launch aid loans."
14 
Consistent with this concepti on of MSF as debt, the first 
two steps of the Ellis model ( i.e., the risk-free rate and 
the premium for general cor porate risk) rely entirely on 
bond yields.356) 
[***] The Panel sustains the US 
objection. 
The Panel requests that the 
EC re-designate all citations 
of the "Ellis Report" in all of the footnotes in its first 
submission as non-BCI.   
508 Professor Whitelaw explains that Ellis overstates the 
cost of equity by employing incorrect assumptions.  
Professor Whitelaw [***15]  Drawing on recent 
scholarship, Professor Whitelaw concludes that the risk premium would be no more than [***
16.  ***17]   The Panel sustains the US 
objection. 
                                                      
14 [[***]]. 
15 [[***]]. 
16 [[***]]. 
17 [[***]]. WT/DS316/R 
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No. of 
paragraph CONTENT DECISION OF THE 
PANEL 
509 In sum, the European Communities calculates the 
alternative benchmark rates by [***].  The European 
Communities notes that the Ellis report applies a fixed project-specific risk premium for all Airbus aircraft 
models.
18  The European Communities adopts the same 
approach. The Panel sustains the US 
objection. 
515 Second , recent scholarship confirms that the Ibbotson 
methodology substantially overstates the equity risk 
premium.  Professor Whitelaw explains that many scholars have rejected  the Ibbotson approach, which is 
based on historical ( ex post ) results that fail to reflect 
investor expectations ex ante .  Instead, more recent 
studies show that the actual equity-based risk premium 
is between [***]. 
19 The Panel sustains the US 
objection. 
595 The European Communities h as provided the Panel with 
the measure. The United States alleges that there is an 
export contingent subsidy in the provisions of Article 7 of the measure that refer to payments on the [***] 
aircraft, and which provide as follows
20: 
The repayment instalment per aircraft is defined as 
follows on the basis of the overall loan in the 
amount of [***].  It is for {...}: The Panel is not prepared to 
rule on this objection at this 
time. 
 
 
 
 
878 - The Panel accepts the EC 
re-designation. 
881 - The Panel accepts the EC 
re-designation. 
907 - The Panel accepts the EC 
re-designation. 
912 [***21. *** ].  The development of the ZAC involved 
two types of works: The Panel is not prepared to 
rule on this objection at this time. 
917 Furthermore, [***]. 
 The Panel is not prepared to 
rule on this objection at this 
time. 
929 Second , the findings of a commercial appraiser confirm 
that the price of the land purchased by Airbus France in 
the ZAC Aéroconstellation was consistent with market 
terms.22 [***].   The Panel sustains the US 
objection. 
949 - The Panel accepts the EC 
re-designation. 
                                                      
18 [***]. 
19 [[***]]. 
20 [***];  US first written submission, paras. 321, 328, 347, 353 second bullet and footnote 415, 354, 
357 and footnote 419, and 360. 
21 [***]. 
22 [***]. WT/DS316/R 
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BCI deleted, as indicated [***] 
 
No. of 
paragraph CONTENT DECISION OF THE 
PANEL 
950 - The Panel accepts the EC 
re-designation. 
951 - The Panel accepts the EC 
re-designation. 
952 - The Panel accepts the EC 
re-designation. 
953 - The Panel accepts the EC 
re-designation. 
955 - The Panel accepts the EC 
re-designation. 
957 - The Panel accepts the EC 
re-designation. 
958 - The Panel accepts the EC 
re-designation. 
959 - The Panel accepts the EC 
re-designation. 
984 and 
985 {Footnotes omitted} 
984  The United States alleges that the Welsh Assembly 
Government (WAG) provided an ad hoc  grant of [***] 
to Airbus UK in Broughton and seems to argue that for 
this reason the grant is specific.  It bases its claim on an application for a grant that it admits Airbus UK did not receive.  Airbus UK's request for a [***] grant under the 
"Regional Selective Assistance" (RSA) programme was 
rejected by the WAG in March 2000.  The United States 
assumes, without any evidence, that the [***] granted in 
September 2000 was an ad hoc  replacement for the 
failed RSA claim. (Para 984) The Panel 
accepts the EC 
re-designation. 
 
 985  This claim is without foundation.  In fact, the [***] 
was neither ad hoc , nor an RSA grant.  Rather, it was 
made up of two grants of [***], each made under other 
generally-available programmes and therefore non-specific within the meaning of Article 2 of the SCM Agreement .  Indeed, the US allegation of 
specificity of the two grants  is based entirely on its 
assumption that they were a direct substitute for the RSA 
grant.  Since there was no RSA grant, the United States has not made a prima facie  case of specificity.  
However, for the sake of completeness, the European Communities will demonstrate that the grants are non-specific. (Para 985) With respect to 
the first set of brackets, the 
Panel accepts the EC 
re-designation. With respect to the second set of brackets, the Panel sustains 
the US objection. 
986 In 2000, the Welsh Assembly Government, through the 
North Wales Training and Enterprise Council 
(CELTEC), awarded [***] grant {...}. The Panel sustains the US 
objection. 
 WT/DS316/R 
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No. of 
paragraph CONTENT DECISION OF THE 
PANEL 
994 Although the United States did not allege the contrary, 
the European Communities would like to 
(pre-emptively) add, that there was neither a de facto  
specificity under Article 2.1(c) of the SCM Agreement.  
During the period when the grant of [***] to Airbus UK 
was disbursed (FY 2000/2001 – FY 2005/2006), {...}.  The Panel sustains the US 
objection. 
1036 The European Communities notes, first, that while the 
EIB established in 2002 a "credit" or "commitment" in 
favour of EADS in the amount of EUR 700 million, only EUR [***] was ever actually drawn by EADS and this 
took place in [***].  The other [***] commitment 
[***].
23 The Panel accepts the EC 
re-designation.   
The Panel understands that 
the US is not objecting to 
other BCI in this paragraph. 
1041 - The Panel accepts the EC 
re-designation. 
1057 The United States ignores completely the fact that none 
of the 1988-1993 loans (outstanding or not24) was 
provided to the company that markets and produces LCA today (Airbus SAS).  With regard to the outstanding loans, the [***] was granted to [***], and 
the [***]
25.  The United States has not explained how 
any benefit allegedly conferred by these loans has 
passed through to Airbus SAS in such a manner as to 
cause the types of present adverse effects to US LCA-related interests alleged by the United States in these 
proceedings. The Panel sustains the US 
objection with respect to the 
phrase " [***]" and denies 
the remainder of the US 
objection. 
1092 EADS [***]. The Panel sustains the US 
objection except with 
respect to the phrase "[***]", with respect to 
which the Panel denies the 
US objection. 
1098 [***].26 The Panel sustains the US 
objection. 
1099 [***.27] The Panel sustains the US 
objection, except with 
respect to the phrase "[***]", with respect to 
which the Panel denies the 
US objection. 
                                                      
23 [***]. 
24 See also the discussion above where the EC explains that except for the [***], none of the 1988-1993 
loans is still outstanding. 
25 [***]. 
26 Daily Treasury Yield Curve Rates from http:/ /www.ustreas.gov/offices/domestic-finance/debt-
management/interest-rate/yield_historical_2004.shtml  
27 [***]. WT/DS316/R 
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BCI deleted, as indicated [***] 
 
No. of 
paragraph CONTENT DECISION OF THE 
PANEL 
1103 Finally, the European Communities notes that with 
regard to the [***] loan, {...}.  The Panel sustains the US 
objection. 
1184 These claims consisted of: [***;28 ***]. The Panel is not prepared to 
rule on this objection at this 
time. 
1399 - The Panel accepts the EC 
re-designation. 
1404 Both Boeing and Airbus, along with market analysts, use 
the respective manufacturer's current year order book to 
evaluate the competitive position of Airbus and Boeing.  
Christian Scherer, Airbus Executive Vice President 
Head of Future Programs and former Deputy Head of Airbus' commercial department, notes that [***
29]  Also, 
Boeing uses order data to demonstrate the success and "market share" of, inter alia , its 787, 777 and 747 
families.  This is reflected in the Boeing marketing slide 
below
30: The Panel sustains the US 
objection. 
 
1406 Orders are important for the manufacturer because the 
terms and conditions of the purchase are set at the time 
of order.  Aircraft specification, net price, discounts, non-price concessions and financing arrangements 
involving the manufacturer are all agreed upon when an 
airline or leasing company signs a purchase agreement.  [***
31]  [***32].  Finally, the order intake determines the 
amount of future deliveries.33 The Panel sustains the US 
objection. 
 
1416 Airlines and leasing companies often decide to order a 
certain aircraft model without considering the 
competitor's equivalent product.  An airline may choose not to initiate a bidding process between the 
two manufacturers [***.
34 ***: ] 
[***.  *** ] 35. The Panel sustains the US 
objection. 
1418 There are also situations in which one manufacturer 
cannot compete for lack of having a product that can 
fulfil the customer's requirements.  For example, if a customer needs a 555-seat aircraft, Airbus can offer its 
A380, yet Boeing cannot offer any equivalent product.  
Similarly, if a customer needs a 450-seat LCA, Boeing The Panel sustains the US 
objection. 
                                                      
28 See also section X.C.2 of this submission. 
29 [***]. 
30 Randy's Journal: Looking ahead, 23 January 2007 (Exhibit EC-286) (Non-BCI).  Mr. Baseler's 
comparison of orders for the 747 compared to the Airbus A380 is for comparison purposes only.  His numerous 
statements regarding competition between the A380 and the Boeing 747 confirm his view that the 747 and the A380 are in different markets.  See Section XII.G.     
31 [***]. 
32 [***]. 
33 See Expert Statement of Rod Muddle, para. 17 (Exhibit EC-19) (Non-BCI); [***]. 
34 [***]. 
35 [***]. WT/DS316/R 
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BCI deleted, as indicated [***] 
 
No. of 
paragraph CONTENT DECISION OF THE 
PANEL 
can offer its 747-8, yet Airbus  cannot offer an equivalent 
product.  As a result, Airbus will not even submit a 
proposal.  [***36]. 
1419 [***.37  ***.38]  Randy Baseler, vice president of 
Marketing for BCA, has acknow ledged this as well.  
Mr. Baseler stated that "{a}bout 150 of the {A320} orders {in 2005} were from China, and {Airbus} did it on the government's decision, not on the airlines' orders.  But China took 150 from each of us."
39 The Panel sustains the US 
objection. 
1420 An airline may also choose to exercise options or 
purchase rights without initiating a bidding process.  
Options and purchase rights are secured at the same time 
of a purchase contract.  [***]. 
[***40]. The Panel sustains the US 
objection. 
1421 Although scale efficiencies favour follow-on orders 
from the same manufacturer, follow-on orders can also 
be the subject of fierce competition.41  Customers are 
sometimes concerned about having a "sole-supplier" of 
airframes.  [***42]  Customers therefore sometimes 
decide to diversify their fleet. The Panel sustains the US 
objection. 
1426 [*** 43]. The Panel sustains the US 
objection, except with respect to the specific 
figures in the fifth and sixth sentences, i.e., [***], with 
respect to which the Panel 
denies the US objection. 
1432 [***44].  Seemingly small differences in the physical or 
economics characteristics of  competing Boeing and 
Airbus LCA can, thus, be decisive in the purchasing decision of an airline.  EC LCA market expert Rod Muddle notes that "{f}or a model to win a competition its manufacturer has to do better on the 
criteria to which the airline attaches greatest priority 
according to its strategic plans."
45 The Panel sustains the US 
objection. 
                                                                                                                                                                     
36 [***]. 
37 [***]. 
38 [***]. 
39 "What's Next for Boeing?," US News.com, 19 October 2006,  
http://www.usnews.com/us news/biztech/articles/061019/19boeing.htm ) (visited 4 January 2007, Exhibit 
EC-278) (Non-BCI). 
40 [***]. 
41 Compare the first written submission of the United States, para 712: "Once an airline orders a 
particular LCA type, however, the scale efficiencies favor  follow-on orders of the sa me type, as well as orders 
of other aircraft from the same manufacturer in order to take advantage of commonalities across an LCA fleet." 
42 [***] 
43 [***]   
44 [***]. 
45 See Expert Statement of Rod Muddle, para. 101. WT/DS316/R 
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BCI deleted, as indicated [***] 
 
No. of 
paragraph CONTENT DECISION OF THE 
PANEL 
1433 Differences in seating and cargo capacity are amongst 
the most important product-related elements of 
competition in LCA sales campaigns.  Capacity has a direct impact on the future costs and revenues an airline 
will incur and generate over the life of the LCA.
46 
[***47]  Furthermore, at times,  a particular LCA can be 
viewed by an airline as being the more technologically-advanced aircraft amongst co mpeting Airbus and Boeing 
LCA.
48 The Panel sustains the US 
objection. 
1434 Direct operating costs are crucial in an airline's 
evaluation of competing offers, in particular since the 
cost of operating a LCA over its life far outweighs its 
purchase price.49  [***50] The Panel sustains the US 
objection. 
1435 Engine manufacturers can also play a significant role in 
determining the outcome of a sales campaign.51  Engines 
are the single most expensive item on an LCA.52 
[***53].  The Panel sustains the US 
objection. 
1436 The net "fly-away" price a customer pays is the 
combination of the airframe price and the engine price.  
While Airbus may offer modest discounts, the engine 
manufacturer may offer the customer very large 
discounts.  As a result, the final fly-away price secured by a customer may be low, even though Airbus secured 
a relatively high price.  [***
54]. The Panel sustains the US 
objection. 
1437 An airline may also attach great value to a certain 
delivery date of its newly-acquired aircraft.55  Airlines 
might require additional aircraft to expand their route 
network.  A late delivery schedule by one LCA manufacturer would thus mean  revenue foregone for that The Panel sustains the US 
objection. 
                                                      
46 See first written submission of the United States, para. 712.  [***]; and Expert Statement of 
Rod Muddle, para. 66 (Exhibit EC-19) (Non-BCI). 
47 [***]. 
48 See Expert Statement of Rod Muddle, para. 35 (Exhibit EC-19) (Non-BCI). 
49 Cash Airplane Related Operating Costs (including crew, fuel, maintenance and landing costs) 
constitute 60% of a LCA's related operating costs, co mpared to 40% capital costs (including financing, 
insurance and depreciation).  Karen Willcox, "Cost Analysis," Massachuse tts Institute of Technology Aerospace 
Computational Design Laboratory, 19 September 2 004, http://ocw.mit.edu/NR/r donlyres/Aeronautics-and-
Astronautics/16-885JFall-2004/9DFE0985-C9C2- 486B-BD37-42060E082AB2/0/pres_willcox.pdf , slide 6 
(visited on 10 December 2006, Exhibit EC-292) (Non-BCI). 
50 [***]. 
51 [***]  See also Expert Statement of Rod Muddle, paras. 27-34 and 63-64 (Exhibit EC-19) 
(Non-BCI). 
52 See [***];  See also Expert Statement of Rod Muddle,  para. 27 (Exhibit EC-19) (Non-BCI). 
53 [***] See also  Expert Statement of Rod Muddle, para. 27 (Exhibit EC-19) (Non-BCI). 
54 [***]. 
55 See Expert Statement of Rod Muddle, paras. 70-71 (Exhibit EC-19) (Non-BCI). 
56 See Expert Statement of Rod Muddle, para. 70 (Exhibit EC-19) (Non-BCI). WT/DS316/R 
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paragraph CONTENT DECISION OF THE 
PANEL 
airline while it awaits delivery of its aircraft. 56 
Alternatively, an airline might want to downsize its fleet to reduce costs in times of an economic downturn.  
Again, a late delivery schedule would mean additional 
costs incurred by the airline pending delivery of the smaller aircraft.  Under those circumstances, an earlier delivery slot offered by a manufacturer might be decisive in an airline's decision to buy Airbus over 
Boeing.  Alternatively, a manufacturer can facilitate the 
"transfer" of a delivery slot from a leasing company or 
other customer to the customer involved.  [***]  
[***]
57 
1449 Not only did Boeing neglect leasing companies as 
potential customers, but Boeing decided to compete with 
them by providing LCA financing support to airlines itself.
58  [***59]  It created "Aircraft Financial Services" 
("AFS"), a group under Boeing Capital Corporation 
("BCC"), a wholly-owned subsidiary of The Boeing 
Company.  AFS was intended to provide financing for Boeing commercial aircraft.  Instead of transferring the risks and benefits associated with aircraft financing to the leasing companies – as Airbus did – Boeing kept, to 
a certain extent, the financing of aircraft in-house in an 
attempt to make further profits.  Thereby, Boeing added a further risk to its LCA business.  In other words, a crisis like the one caused by 9/11 would hit Boeing twice – first, its LCA manufacturing business, and at the 
same time also its financing business. The Panel sustains the US 
objection. 
1451 Airbus's strategy of securing orders with leasing 
companies proved to be very valuable following the 
events of 9/11, the resulting global economic downturn, and the Asian SARS crisis.  [***.
60  ***.61  ***.62 
***.63] The Panel sustains the US 
objection. 
1536 These slides identify the same "markets" that the 
European Communities has identified above: [***64]. The Panel sustains the US 
objection. 
                                                                                                                                                                     
57 [***]. 
58 [***]. 
See further  GE Commercial Aviation Services, Loans and Structured Finance, 
http://www.gecas.com/financing.asp  (visited 20 December 2006, Exhib it EC-303) (Non-BCI).   Leasing 
companies regularly sell and buy LCA to maintain a sound portfolio of both Airbus and Boeing LCA.  Although 
leasing companies primarily offer LCA on operating leases to airlines, leasing companies also provide financing 
support to airlines "to help [airlines ] renew their fleets, increase liquidity, lower debt, and move asset risk off 
their books."  
59 [***]. 
60 [***]. 
61 [***]. 
62 [***]. 
63 [***]. 
64 [***]. WT/DS316/R 
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No. of 
paragraph CONTENT DECISION OF THE 
PANEL 
1539 The table below reflects Airbus' as well as Boeing's 
categorization of where their respective aircraft fall 
within these various LCA markets65:  {Table omitted}  The Panel sustains the US 
objection. 
note 1579 (refers to para. 1712, which reads:  [[***]]  T h i s  i s  
confirmed by the fact that, [[***]]1579) 
1579 [[***]] 
 The Panel cannot rule on 
this objection, as it cannot 
determine to what BCI-designation the US is 
objecting in paragraph 1579. 
1542 The United States alleges that the Boeing 747 family 
was in competition with the Airbus A380 family.  
However, as discussed in more detail below, [***.66] 
Section XII.J below sets forth further detailed evidence of the separate nature of the markets for the A380 family 
and the 747 family. The Panel sustains the US 
objection. 
1543 - The Panel accepts the EC 
re-designation. 
1546 - The Panel accepts the EC 
re-designation. 
1547 [***] The Panel sustains the US 
objection. The Panel 
understands that the US is 
not objecting to other BCI in 
this paragraph. 
1548 [***]  The Panel sustains the US 
objection.  The Panel 
understands that the US is 
not objecting to other BCI in 
this paragraph. 
1560 Finally, the United States provides a handful of 
examples where certain airlines fly Boeing or Airbus 
LCA from different LCA fam ilies to or from the same 
location to support its finding of a single like product.67 
However, this evidence of "demand substitution" ignores 
[***.68   *** ]. The Panel sustains the US 
objection except with 
respect to the sentence 
"[***]", with respect to 
which the Panel denies the 
US objection. 
                                                      
65 [***] 
Boeing markets the 787-3 as a 290-3 30 seat aircraft in a 2-class sea ting configuration.  As the 787-3 
has the same fuselage as the 787-8, the 787-3 is assumed to  have the same 3-class seatin g capacity as the 787-8.  
Boeing markets the 787-8 as a 210-250 seat aircraft in a 3-class configuration. 
66 See Section XII.J, below . 
67 See First Written Submission of the United States, para. 728. 
68 [***]. WT/DS316/R 
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1618 The US/Boeing methodology therefore reflects these 
established principles.  It allocates alleged subsidies 
associated with MSF loans tied to a specific LCA programme over the marketing life of that programme, 
beginning in the year of launch.
69  [***.70]  B e c a u s e  
R&T grants support basic research that is not tied to a specific aircraft programme, these subsidies are 
allocated over [***
71] The Panel sustains the US 
objection except with 
respect to the figures "[***]", with respect to 
which the Panel denies the 
US objection.  
1619 [***].  The European Communitie s recalls that the "base 
case" simulation for the model described in the Dorman 
report assumes only a 15-year period of deliveries.72 
[***].   The Panel sustains the US 
objection except with 
respect to the figures 
"[***]", with respect to 
which the Panel denies the 
US objection.  
1623 As described above, the amount of the subsidy conferred 
by R&T support (which is not tied to a specific 
programme) is allocated across all Airbus LCA programmes.
73  Beginning in the year of grant, it is 
allocated across all programmes and [***]  A s  m o r e  
fully explained in Section V, above, the European Communities reduces these subsidy magnitudes to 
account for subsidies that were extinguished or extracted 
when new owners acquired portions of the Associated 
Manufacturers or Airbus S.A.S.
74 The Panel sustains the US 
objection except with 
respect to the figure " [***]", 
with respect to which the Panel denies the US 
objection. 
1629 Third , the amount of subsidy associated with the 
four MSF loans is allocated across all orders in the A320 
programme [***]  This period is based on [***].  
Further, beginning in the year of grant, the amount of subsidy associated with R&T support is allocated across 
all programmes (including the A320 programme) [***].  
This approach provides a magnitude of the subsidy for each order in the A320 programme for a given year.
75 The Panel sustains the US 
objection except with 
respect to the figures " [17", 
"four", "16", "three" and "18]", with respect to which 
the Panel denies the US 
objection. 
 
1640 [***].  In other words, MSF loans do not inherently 
confer a benefit. The Panel accepts the EC 
re-designation. 
1650 [***].   Because of these repayment provisions, market 
risk has become less relevant and less costly for 
creditors to bear over time. The Panel sustains the US 
objection except with 
respect to the figure " [***]", 
with respect to which the Panel denies the US 
objection.  
                                                      
69 [***]. 
70 [***]. 
71 [***]. 
72 Dr. Gary J. Dorman, "The Effect of Launch Aid on the Economics of Commercial Airplane 
Programs," October 2006 (hereinafter "Dorman report"), exhibit US-70, p. 3. 
73 [***]. 
74 See Section V, above;   [***]. 
75 [***]. WT/DS316/R 
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No. of 
paragraph CONTENT DECISION OF THE 
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1668 Finally, to the extent that the US arguments can be 
construed to assert that Airbus' A380 programme [***], 
the European Communities dem onstrates that this is not 
the case.  The Panel sustains the US 
objection. 
Title 
before 
1728 - The Panel accepts the EC 
re-designation. 
1734 Like Boeing, [***]76  In developing the A380, Airbus 
"deliberately planned the capacity of the A380 away 
from the A340-600 and 747."77 The Panel sustains the US 
objection. 
1735 ... [***]78 EC LCA market expert Rod Muddle confirms 
Mr. Scherer's assessment.79 The Panel sustains the US 
objection. 
1738 - The Panel accepts the EC 
re-designation. 
1739 - The Panel accepts the EC 
re-designation. 
1742 ...[***]80  As a result, large airlines decided to "park the 
big airplanes"81 – a development that had dramatic 
effects on Boeing 747-400 market values. The Panel sustains the US 
objection. 
1759 Finally, as part of its "general" causation arguments,  the 
United States suggests that Airbus would not have 
launched the A380 programme but for MSF loans.82 
This argument has no merit, because Airbus' decision to invest in the A380 programme was based on a sound assessment of the business case for the programme.  
[***] The Panel sustains the US 
objection. 
1767 [***]83   The Panel sustains the US 
objection. 
1809 [***.84  *** ].85 With respect to the first 
sentence, the Panel accepts 
the EC re-designation.  With 
respect to the second 
sentence, the Panel sustains 
the US objection.  
                                                      
76 [***]. 
77 "On a Roll," Airline Business , April 2005, p. 45 (Exhibit EC-351). 
78 [***]. 
79 See Expert Statement of Rod Muddle, paras. 38 and 44 (Exhibit EC-19). 
80 [***]. 
81 "Is This Old Bird About to Get its Wings Clipped?," USA Today , 12 August 2004 (Exhibit EC-401). 
82 See First Written Submission of the United States, para. 813. 
83 [***]. 
84 Airclaims CASE database, data query as of 19 January 2007 (Exhibit EC-21). 
85 Airclaims CASE database, data query as of 19 January 2007 (Exhibit EC-21). WT/DS316/R 
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No. of 
paragraph CONTENT DECISION OF THE 
PANEL 
1810 [***.86  ***.87  *** ]. With respect to the second 
and third sentences, the 
Panel accepts the EC re-designation. With respect 
to the first and fourth 
sentences, the Panel sustains 
the US objection. 
1814 - The Panel accepts the EC 
re-designation. 
1829/1830 Third, the causal link between any effects of de minimis  
alleged A320 subsidies and lower Airbus pricing is 
broken if there are other important non-price-related reasons why the company won the particular sale.  The airlines in the challenged sal es campaigns noted that the 
following reasons were amongs t the determining factors 
for choosing the A320 family LCA over the 
Boeing 737NG: 
• advantages in a variety of A320 attributes, 
including wider aisles1725 and cockpit 
technology1726; 
• advantages in the economics of the A320 
family, including savings in maintenance cost and lower fuel burn
1727; 
• higher passenger capacity of the A320 family 
LCA1728;  
• savings resulting from commonality with the 
airline's existing Airbus fleet1729, 
• [***]1730  The Panel sustains the US 
objection. 
1880 
 The easyJet sales campaign took  place in 2002, when the 
airline industry was "in the midst of the most serious 
short-term downturn in modern aviation history."88 
LCA demand collapsed during the 2001-2003 period, due to the collapse of the "dot.com" economy, the events 
of 9/11 and the global economic recession that 
resulted.
89  Furthermore, many LCA that were 
previously ordered but not ye t delivered were cancelled 
or deferred.  [***] The Panel sustains the US 
objection. 
1959 
 Causal Link:   Most important in assessing the causal 
link is the fact that [***.90  ***.91  ***.92  *** ].  Boeing 
has acknowledged this fact publicly.93 The Panel denies the US 
objection. 
                                                      
86 Ryanair ordered 100 737-800 from Boeing on 24 January 2002.  See Airclaims CASE database, data 
query as of 19 January 2007 (Exhibit EC-21). 
87 EasyJet ordered 120 A319 s on 31 December 2002.  See Airclaims CASE database, data query as of 
19 January 2007 (Exhibit EC-21). 
88 Boeing 2003 Current Market Outlook, p. 4 (Exhibit EC-295). 
89 Boeing 2003 Current Market Outlook, p. 6 (Exhibit EC-295). 
90 [***]. WT/DS316/R 
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No. of 
paragraph CONTENT DECISION OF THE 
PANEL 
Title 
before 
2011 - The Panel accepts the EC 
re-designation. 
2012 - The Panel accepts the EC 
re-designation. 
2015 The [***] between the A330 a nd 767 families during 
2004-2006, and the [***] between 2001-2003 are key 
facts for the Panel's assessment of the US serious prejudice claims with respect to alleged subsidies benefiting Airbus A330 family LCA.  Effects of such 
subsidies will generally only be experienced where there 
is actual competition.  The lack of competition is consistent with the absence of a genuine and substantial 
relationship of cause and effect between any A330 
subsidies and lower 767 prices. The Panel sustains the US 
objection. 
2033 Causal Link:   The small number of orders and deliveries 
in every one of the eight th ird country markets makes it 
impossible to discern any clear trends in the development of orders or deliv eries.  Further, the small 
amounts of alleged subsidies for Airbus A330 LCA have not been shown by the United States to cause any 
displaced or impeded US market share in 200-300 seat 
product markets in any of these seven countries.  As 
discussed in Section XII.L. 1.(b) above, there was [***] The Panel sustains the US 
objection. 
2048 Second, as discussed in Section XII.L.1.(b) above, the 
Airbus [***]. The Panel sustains the US 
objection. 
2071 As the Airbus A340 and the Boeing 777 are the only 
LCA in the 300-400 seat market currently in production, 
they compete directly in  certain sales campaigns.  
[***].94 The Panel accepts the EC 
re-designation. The Panel 
understands that the US is not objecting to BCI in the 
remainder of this paragraph. 
                                                                                                                                                                     
91 [***]. 
92 [***]. 
93 For example, Randy Baseler, vice president of Marketing for Boeing Commercial Airplanes, noted in 
a recent interview that  
{o}]rders for the A320 aren't as robust as they  have been, but of course they put on a 
surge late last year {2005} to beat us.  About 150 of the orders were from China, and 
they did it on government's decision, not on the airlines' orders.  But China took 150 
from each of us .  
Interview with Randy Baseler, What's Next fo r Boeing? (Exhibit EC-278) (underlining added). 
94 [***]. WT/DS316/R 
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No. of 
paragraph CONTENT DECISION OF THE 
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2074 The European Communities has discussed in detail, in 
Section XII.I above, the natu re of the MSF and other 
measures challenged by the United States.  A significant aspect of the nature of these alleged subsidies that are 
tied or allocated to A340 LCA is their age.  MSF loans 
for the A340 were granted [***.
95]  Likewise, Member 
States entered into MSF loans for the A340-500/600 [***].
96  Thus, the age of these subsidies strongly 
militates against the existence of  present  adverse effects. The Panel sustains the US 
objection. 
2097 Having chosen the Airbus A340 over the 777 based on 
performance considerations, Iberia also requested price 
discounts from Airbus.  This was because the A340s being offered by Airbus were "white-tail" aircraft rendered homeless by the bankruptcy of Swissair.
97 
[***.98  *** ].99 With respect to the first 
bracketed sentence, the 
Panel sustains the US objection. With respect to the second bracketed sentence, the Panel accepts the EC re-designation. 
 
                                                      
95 [***]. 
96 [***]. 
97 "The long hello,"  Flight International , 3 May 2005, 
http://www.flightglobal.com/articles/20 05/05/03/197483/the-long-hello.html , p. 36 (Exhibit EC-496). 
98 [***] 
99 See Expert Statement of Rod Muddle, paras. 58-60. (Exhibit EC-19). WT/DS316/R 
Page F-20 
BCI deleted, as indicated [***] 
 
ANNEX F-2 
 
COMMUNICATION OF 15 MARCH 2007 
 
European Communities and Certain Member States – Measures  
Affecting Trade in Large Civil Aircraft (DS316 ) 
  
1. The Panel is in receipt of the EC's revised version of its First Writ ten Submission, submitted 
in response to the Panel's ruling of 13 March 2007 on the United States' objections to certain of the 
designations in the proposed non-BCI version of the European Communities' first written submission. 
 2.  At the outset, the Panel notes that it is surpri sed and disappointed that the EC chose to make 
this submission only in the form of an HSBI s ubmission.  Given that the revised version does not 
change anything with respect to HSBI information, and that it is important that the parties and the 
Panel have a clear understanding of wh ich information is to be treated  as BCI in preparing for next 
week's meeting, it would have been far preferable for the EC to simply revise the BCI version of its 
First Written Submission in order to implement the Panel's ruling.  Indeed, while we did not so 
specify, this is what we had anticipated would occur.   3. Under the circumstances, given the limited time remaining to prepare for next week's 
meeting, the EC is directed to prepare a revised BCI version of its First Written Submission, reflecting 
the Panel's ruling of 13 March, as modified below,  and submit it to the Panel and the United States at 
the earliest possible moment, and in any event no later than 17.30 on Friday 16 March 2007.  4. The Panel notes that, should the EC conclude, in  light of this decision that it would have to 
consider withdrawing any information, the Pane l would expect it to withdraw only the minimum 
specific information necessary to satis fy itself.  Any withdrawal of information should be notified to 
the Panel and the United States at the earliest possi ble moment, and in any event no later than 17.30 
on Friday 16 March 2007.  
No. of 
paragraph CONTENT DECISION OF THE PANEL 
1036 The European Communities notes, first, that 
while the EIB established in 2002 a "credit" 
or "commitment" in favour of EADS in the 
amount of EUR 700 million, only EUR [***] was ever actually drawn by EADS and 
this took place in [***]. The other [***] 
commitment [***].
1 The Panel accepts the EC re-designation 
of 15 March 2007.  
1092 EADS [***] 
 The Panel accepts the EC re-designation 
of 15 March 2007. 
1098 [***]2 The Panel accepts the EC re-designation 
of 15 March 2007. 
1099 [***.3] 
 The Panel accepts the EC re-designation 
of 15 March 2007.   
                                                      
1 [***]. 
2 Daily Treasury Yield Curve Rates from http://www.ustreas.gov/offices/domestic-finance/debt-
management/interest-rate/yield_historical_2004.shtml  
3 [***]. WT/DS316/R 
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BCI deleted, as indicated [***] 
 
No. of 
paragraph CONTENT DECISION OF THE PANEL 
1419 [***.4  ***5]  Randy Baseler, vice president 
of Marketing for BCA, has acknowledged 
this as well.  Mr. Baseler stated that "{a}bout 150 of the {A320} orders {in 2005} were from China, and {Airbus} did it on the government's decision, not on the 
airlines' orders.  But China took 150 from 
each of us."
6 The Panel confirms and maintains its 
original decision.  The Panel notes its 
views, expressed in its communication of 13 March, that it does not consider that "opinions" or "positions" may be designated as BCI or HSBI merely 
because those opinions or positions were 
expressed in relation to BCI or HSBI. 
1451 Airbus's strategy of securing orders with 
leasing companies proved to be very 
valuable following the events of 9/11, the resulting global economic downturn, and the 
Asian SARS crisis.  [***.
7  ***.8  * * * .9 
***.10] The Panel confirms and maintains its 
original decision.   
1759 Finally, as part of its "general" causation 
arguments,  the United States suggests that 
Airbus would not ha ve launched the A380 
programme but for MSF loans.11  T h i s  
argument has no merit, because Airbus' decision to invest in the A380 programme was based on a sound assessment of the 
business case for the programme.  [***.] The Panel confirms and maintains its 
original decision.  The Panel notes that 
there is nothing in the bracketed text that 
suggests that this is a statement of 
information, as opposed to a statement of opinion or position, which as noted, it does not consider may be designated as BCI or HSBI merely because such 
opinion or position is expressed in 
relation to BCI or HSBI. 
1810 [***.12  ***.13  ***. ] 
 The Panel accepts the EC re-designation 
of 15 March 2007. 
1829/1830 Third, the causal link between any effects of 
de minimis  alleged A320 subsidies and 
lower Airbus pricing is broken if there are other important non-pr ice-related reasons 
why the company won the particular sale.  
The airlines in the challenged sales 
campaigns noted that the following reasons were amongst the determining factors for choosing the A320 family LCA over the 
Boeing 737NG: The Panel accepts the EC re-designation 
of 15 March 2007. 
                                                      
4 [***]. 
5 [***]. 
6"What's Next for Boeing?," US News.com, 19 October 2006,  
http://www.usnews.com/us news/biztech/articles/061019/19boeing.htm ) (visited 4 January 2007, Exhibit 
EC-278) (Non-BCI). 
7 [***]. 
8 [***]. 
9 [***]. 
10 [***]. 
11 See first written submission of the United States, para. 813. 
12 Ryanair ordered 100 737-800 from Boeing on 24 January 2002.  See Airclaims CASE database, data 
query as of 19 January 2007 (Exhibit EC-21). 
13 easyJet ordered 120 A319s on 31 December 2002.  See Airclaims CASE database, data query as of 
19 January 2007 (Exhibit EC-21). WT/DS316/R 
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No. of 
paragraph CONTENT DECISION OF THE PANEL 
• advantages in a variety of A320 
attributes, including wider aisles1725 
and cockpit technology1726; 
• advantages in the economics of the 
A320 family, including savings in 
maintenance cost and lower fuel 
burn1727; 
• higher passenger capacity of the 
A320 family LCA1728; 
• savings resulting from commonality 
with the airline's existing Airbus 
fleet1729, 
• [***]1730 
2015 The [***] between the A330 and 767 
families during 2004-2006, and the [***] 
between 2001-2003 are key facts for the 
Panel's assessment of the US serious prejudice claims with respect to alleged subsidies benefiting Airbus A330 family LCA.  Effects of such subsidies will 
generally only be experienced where there is 
actual competition.  The lack of competition is consistent with the absence of a genuine and substantial relationship of cause and effect between any A330 subsidies and 
lower 767 prices. The Panel accepts the text as modified 
by the EC on 15 March 2007. 
2033 Causal Link:   The small number of orders 
and deliveries in every one of the eight third 
country markets makes it impossible to discern any clear trends in the development of orders or deliveries.  Further, the small 
amounts of alleged subsidies for Airbus 
A330 LCA have not been shown by the United States to cause any displaced or impeded US market share in 200-300 seat product markets in any of these 
seven countries.  As discussed in 
Section XII.L.1.(b) above, there was [***]. The Panel accepts the text as modified 
by the EC on 15 March 2007. 
2048 Second, as discussed in Section XII.L.1.(b) 
above, the Airbus [***]. The Panel accepts the text as modified 
by the EC on 15 March 2007. WT/DS316/R 
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No. of 
paragraph CONTENT DECISION OF THE PANEL 
2097 Having chosen the Airbus A340 over 
the 777 based on performance 
considerations, Iberia also requested price discounts from Airbus.  This was because the A340s being offered by Airbus were "white-tail" aircraft rendered homeless by 
the bankruptcy of Swissair.
14  [***.15 
***.]16 The Panel accepts the EC re-designation 
of 15 March 2007. 
 
                                                      
14 "The long hello,"  Flight International , 3 May 2005, 
http://www.flightglobal.com/articles/20 05/05/03/197483/the-long-hello.html , p. 36 (Exhibit EC-496). 
15 [***]. 
16 See Expert Statement of Rod Muddle, paras. 58-60. (Exhibit EC-19). WT/DS316/R 
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ANNEX F-3 
 
COMMUNICATION OF 30 MARCH 2007 
 
European Communities and Certain Member States – Measures  
Affecting Trade in Large Civil Aircraft (DS316 ) 
 
 1. The Panel has considered a number of outstanding issues concerning designation of 
information as BCI or HSBI in this dispute, incl uding issues raised in the United States' objections 
dated 28 February 2007 to the EC's designation of cer tain information in its first written submission as 
"highly sensitive business information", the United States' letter of 27 March 2007 commenting on 
whether the version of the EC first written s ubmission submitted on 16 March 2007 may be 
considered the basis of a version redacting any BCI, the United States letter of 8 February 2007, and 
the United States' answers, dated 12 February 200 7, to certain questions posed by the Panel. 
 2. Before turning to the resolution of the specifi c issues raised by the United States, the Panel 
wishes to remind the Parties of the general pr inciples set forth in our 13 March 2007 decision 
concerning the designation of "business confidential info rmation" in the EC's first written submission.  
As the Panel indicated at that time, those same gene ral principles apply with equal force in the context 
of the designation of "highly sensitive bu siness information" in this dispute. 
 3. As we noted in our 13 March 2007 decision, the Panel's BCI/HSBI Procedures are designed to protect specific information, not entire submissions  or other documents.  It is for this reason that 
paragraphs 4 and 5 of the BCI/HSBI Procedures requ ires that the specific information designated as 
BCI/HSBI be set off within brackets (single or do uble, as appropriate) within any given printed or 
electronic document.  We set out in our previous decision a number of implications of this principle for the manner in which the BCI/HSBI Procedures are to be applied in this dispute, including our 
view that the Parties are not to present entire submissions or exhibits categorized as BCI or HSBI, but 
rather are to specifically identify,  through the use of brackets as pr ovided for in paragraphs 4 and 5, 
the information within those submissions or exhib its they consider should be so designated.   
 4. The Panel has applied the general princi ples set out in our 13 March 2007 decision in 
resolving pending issues concerning the designation of  BCI and HSBI.  The Panel's specific decisions 
regarding the designation of HSBI in the EC's fi rst written submission are set out in the attached 
annex, which contains BCI.  The annex also i ndicates those instances where the Panel has accepted 
the EC's proposed re-designation of certain information as BCI, or non-BCI, as the case may be.     5. The Panel also notes the continuing designation of  titles of exhibits as BCI in the version of 
the EC's first written submission submitted on 16 Ma rch 2007.  As the Panel instructed in its 
13 March 2007 decision, it "does not believe it approp riate, as a general matter, to bracket the titles of 
exhibits as BCI and HSBI in their entirety.  If, as an exceptional matter, the title itself contains specific information that a Party considers to be  BCI or HSBI, the Panel requests that the Party 
identify the document with a non-BCI/HSBI title th at permits a reasonabl e understanding of the 
nature of the exhibit in question". 
 
6. The EC is directed to prepare a revised version of its first written submission, fully 
implementing the Panel's decisions of 13 March 2007  and today, and the re-designations proposed by 
the EC and accepted by the Panel, and submit it to the Panel, and serve the United States, no later than 
close of business Thursday 5 April 2007 .  The EC shall, at the sa me time, serve a draft non-BCI 
version on the third parties.  The Panel notes that it has made no decisions, in the abstract, as to WT/DS316/R 
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BCI deleted, as indicated [***] 
 
whether information which it is ruling is not pr operly designated as HSBI may be re-designated 
as BCI.1 
 7. In addition, we direct that the EC specify precisely the information which it considers to be 
BCI or HSBI in the following documents, by encl osing it within brackets (single or double, as 
appropriate), as provided for in paragraphs 4( a) and 5(a) of the BCI/HSBI procedures, and 
resubmitting the relevant documents:  
• statements of Messrs Scherer and Gordon  (Exhibits EC-14 (BCI) and EC-16 (BCI)) 
 
• document DS316-EC-HSBI-0001143 (the French project appraisal for 
the A340-500/600) 
 
• document DS316-EC-HSBI-0001174 (the French project appraisal for the A380) 
 
• document DS316-EC-HSBI-0001199 (the French project appraisal for the A330-200) 
 
• document DS316-EC-HSBI-0001211 (the UK project appraisal for the A380) 
 
• document DS316-EC-BCI-0006130 (Exhibit US-49)  
 
• document DS316-EC-BCI-0000532 (Exhibit US-125) 
 
• document DS316-EC-HSBI-000088 (Further Calculations of Present Value of 
Outstanding Airbus Debt to German Government (1999)) 
 
• document DS316-EC-HSBI-000146 (Calculati ons of Present Value of Outstanding 
Airbus Debt to German Government (1998)) 
 
• document DS316-EC-HSBI-000199 (Comments to Present Value Calculations of 
Outstanding Airbus Debt to German Government of 23 June 1997 (Present 
Value 1998)) 
 
• document DS316-EC-HSBI-000205 (C&L German Auditing Agency's Letter to the 
German Ministry of Economics of 26 July 1999) 
 8. While the Panel recognizes the point raised by  the United States in its request that the EC 
resubmit all of its BCI exhibits with proper bracketi ng, the Panel considers that it would be unrealistic 
to expect that this could be accomplished at this late stage without causing unacceptable delays in the 
proceedings.  Nonetheless, the Panel considers it impe rative, in order for this dispute to go forward 
based on a clear understanding of the status of inform ation submitted to the Panel, that BCI and HSBI 
submitted to the Panel be clearly identified.  Theref ore, the Panel considers that additional steps are 
necessary to properly identify such inform ation in exhibits already submitted. 
 
9. Therefore, with respect to exhibits alread y submitted to the Panel in connection with the 
parties' first submissions and the meeting with the Pa nel, the Panel directs each party to designate, by 
close of business Tuesday, 3 April 2007  specific exhibits which it considers contain information 
originating with the other party, which require br acketing in order to enable a party to defend its 
interests.  Such designation is without prejudice to either party making further requests with respect to 
                                                     
 
1 The Panel recognizes the possibility that the non-BCI  version served on third parties on 5 April 2007 
may require further revision in light of subsequent events.  However, the Panel considers it important to avoid 
additional delays in providing the third parties with a non-BCI version of the EC's first written submission from 
which they can begin to prepare their own submissions. WT/DS316/R 
Page F-26 
BCI deleted, as indicated [***] 
 
designation of information in previously submitted exhibits at a later date, should this become 
necessary.2  The Panel expects that the parties will coopera te in this task by limiting, to the maximum 
extent possible, their requests to re-bracket previous ly submitted exhibits.  The parties will then have 
until Monday, 16 April 2007 to resubmit the designated exhibits  with bracketing of information 
considered by the originating party to be BCI or HSBI .  The parties should be guided in this regard by 
the general principles enunciated in our decision of 13 March 2007, as well as be informed by the 
specific rulings we have made with resp ect to contested designations to date. 
 10. The Panel expects that any exhibits to be  submitted in the future will comply with 
paragraphs 4 and 5 of the BCI/HSBI Procedures.  To  be clear, parties shall set off, within brackets 
(single or double, as appropriate), the specific in formation designated as BCI/HSBI in all submissions 
to the Panel, including all exhibits .   
 11. As we noted in our 13 March 2007 decision, we "recognize{} that the application of the 
BCI/HSBI Procedures implies a significant burden on the Parties (and on the Panel), but the Parties 
were well aware that this would be the case when they  sought such procedures.  The Panel considers it 
essential that these Procedures be implemented in a manner that protects the legitimate rights of 
defence of both Parties, and that allows the Pane l to perform its work and to explain its ultimate 
decision in a comprehensible manner.  If these Pr ocedures prove inadequate as implemented, the 
Panel could be forced to re-examine them.  The Panel further notes that the efficiency of these 
Procedures at the panel level may influence the view s of the Appellate Body with respect to how to 
treat information in the event of an appeal.  It is th erefore important that the Parties work together in a 
cooperative spirit to maintain the credibility of these Procedures." 
 
                                                     
 
2 This is also without prejudice to a party requesting that the party that originally submitted the 
information indicate with precision the portions of a document containing BCI and HSBI, as provided for in 
paragraphs 38(c)(i) and 52(d)(i) of the BCI/HSBI Procedures.  We note that we have decided not to amend 
those procedures as we had proposed in our communication dated 20 February 2007. WT/DS316/R 
 Page F-27 
BCI deleted, as indicated [***] 
 
ANNEX  
 
SPECIFIC ISSUES RAISED BY THE US REGARDING DESIGNATION  
OF HSBI IN THE EC'S FIRST WRITTEN SUBMISSION  
 
 
No. of Paragraph, 
Note or Exhibit CONTENT DECISION OF THE 
PANEL 
footnote 153 footnote to paragraph 230 [[***]] The Panel sustains the US 
objection. 
233 Both Lagardère and the French State, as is 
standard practice for large merger transactions, 
commissioned highly respected investment 
banks to determine the market value of their respective contributions to the new company, ASM.  The French State retained [[***]], and 
Lagardère retained [[***]]  These firms valued 
MHT, Aérospatiale, and the combined firm, 
ASM.  The experts applied a combination of a discounted cash flow ("DCF") method and the comparables method to determine the absolute 
and relative values of Aérospatiale and MHT.
3  The Panel sustains the US 
objection. 
234 and 
footnote 156 Based on MHT's pre-merger business plans, 
[[***]] found the relative value of MHT to the 
combined company to be [[***]] percent.  It 
derived this ratio by calculating a high and low estimated value for each entity.  Based on these values, it found the relative value of 
MHT to the combined company to be in the 
range of [[***]] percent to [[***]] percent, 
with an average ratio of [[***]] percent.
4 
Footnote blanked: [[***]] The Panel sustains the US 
objection. 
                                                      
3 In market transactions, such as sa les, spin-offs, mergers, or share offerings, it is standard practice to 
involve professional investment bankers to prepare valuations of the company or production subject to the 
transaction.  The valuation methods used by investment bankers are widely recognized and, although methods 
may vary, they all aim at valuing a company's net present value at the time of the transaction.  One of the most 
commonly applied methods is "Discounted Cash Flow", which determines the value based on the projected 
future cash flows while taking into consideration a disc ount rate that reflects the probability that the cash flow 
will be realized (the risk factor). 
4 [[***]] . WT/DS316/R 
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BCI deleted, as indicated [***] 
 
No. of Paragraph, 
Note or Exhibit CONTENT DECISION OF THE 
PANEL 
235 and notes 157 
and 158 [[***]] using a DCF method, found that MHT 
had a value relative to ASM falling between 
[[***]] percent and [[***]] percent, the 
mid-range of which is [[***5]].  Thus, [[***]] 
found the synergies of the companies were 
such that MHT had more value relative to the new company than simply the sum of its parts.  [[***]] used the comparables valuation 
method and obtained a relative value for MHT 
of [[***]] percent.
6 
Blanked Footnotes 157 and 158: [[***]] The Panel sustains the US 
objection. 
248 The parties to the EADS transaction retained 
reputed investment banks to assess the proposed deal and establish the relative values 
of each of the merging entities.  To perform this due diligence, Chrysler engaged [[***]]; 
Lagardère engaged [[***]];  ASM engaged 
[[***]];  the Spanish State engaged [[***]], 
and the French State engaged [[***]].  These 
six investment banks were supported by an 
army of accountants and lawyers.  Each investment bank conducted extensive assessments of the value of the assets of its client, the value of assets of potential partners, and the value of the proposed combined entity. The Panel sustains the US 
objection. 
252 and footnotes 
166 and 167 For example, [[***]], on behalf of ASM, 
employed two income approaches to business 
valuations – segment DCF and EBITDA.  Applying these methods, Lazard obtained valuation ratios of [[***]] percent to [[***]] 
percent for ASM; [[***]] percent to [[***]] 
percent for DASA; and [[***]] percent to 
[[***]] percent for CASA.
7  Similarly, [[***]], 
on behalf of the Spanish State, applied the DCF method, including a sensitivity analysis 
for valuating ASM, DASA and CASA, and 
arrived at a valuation of CASA that fell within 
the exchange ratios finally agreed upon.
8 
Blanked Footnotes 166 and 167: [[***]] The Panel accepts the EC 
re-designation with respect to 
paragraph 252 and note 167. 
The Panel sustains the US 
objection with respect to 
note 166. 
 
 
 
Paragraph 310 
and footnote 214 The Associated Manufacturers and NatCos 
also enter into industrial agreements with 
Airbus GIE or Airbus SAS. By signing these agreements, the AMs and NatCos commit The Panel sustains the US 
objection. 
                                                      
5 [[***]]  (HSBI Annex V, EC-HSBI-0000903). 
6 [[***]] . 
7 [[***]] . 
8 [[***]]  is described in the report of the Consej o Consultivo de Priva tizaciones, Informe de 
Actividades – 2000, at pp. 49-53 (Exhibit EC-58) (Non-BCI). WT/DS316/R 
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BCI deleted, as indicated [***] 
 
No. of Paragraph, 
Note or Exhibit CONTENT DECISION OF THE 
PANEL 
themselves to the terms of the framework agreements.
9  In addition, the AMs and 
NatCos agree to abide by the provisions of the 
[[***]] which distributes work share among 
the AMs and NatCos, and the [[***]], which 
identifies the development costs that each 
entity will incur based on its work share.10 
Blanked Footnote 214: [[***]] 
419 The United States finally alleges11 that France 
"based its repayment schedule on Airbus's 
own optimistic sales forecasts".  This statement is misleading. The Airbus forecast 
for the A380, which was in no sense 
"optimistic", was [[***]] sales in the first 
[[***]].  In compliance with Article 4.1 of the 
1992 Agreement , France carried out its own 
project appraisal for the A380
12 and 
conservatively sought accelerated repayment 
of the MSF in [***] after disbursement over 
the much lower number of [***]. The Panel accepts the EC 
re-designation with respect to 
the sales projections.   
The Panel understands that 
the US is not objecting to 
designation of other 
information as HSBI. 
425 With regard to Article 4.1 of the 
1992 Agreement,  the European Communities 
addresses the misleading statement by the 
United States mistakenly states13 that Germany 
"joined France in basing its repayment schedule on Airbus's own optimistic forecasts". The Airbus forecast for the A380 was [[***]] sales in the first [[***]].  Germany 
conservatively sought accelerated repayment 
on [***], the same as that used by France and 
the UK on the basis of their own project 
appraisals. The Panel accepts the EC 
re-designation with respect to the sales projections.   
The Panel understands that 
the US is not objecting to 
designation of other information as HSBI. 
431 Finally, with regard to Article 4.1 of the 
1992 Agreement , the United States 
misleadingly states that the Spanish Government's return is based on "Airbus's own optimistic sales forecasts".
14 Like other 
Member States, Spain conservatively required 
accelerated repayment on a lower number of 
sales, in its case [***] as compared with the 
Airbus forecast of [[***]] The Panel accepts the EC 
re-designation with respect to 
the sales projections.   
The Panel understands that 
the US is not objecting to 
designation of other 
information as HSBI. 
                                                                                                                                                                     
9 [***] . 
10 [***] ;  [[***]] . 
11 US first written submission, para. 269. 
12 [[***]] . 
13 US first written submission, para. 277. 
14 US first written submission, para. 286. WT/DS316/R 
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BCI deleted, as indicated [***] 
 
No. of Paragraph, 
Note or Exhibit CONTENT DECISION OF THE 
PANEL 
475 The Member States also structured MSF 
contracts for the A380 on the basis of 
conservative forecasts and methodologies. The "base case" estimate for the A380 
business case predicted that Airbus SAS 
would deliver a total of [[***]]
15 Indeed, the 
longer term forecasts foresaw a demand of up 
to [[***]]16 The Panel accepts the EC 
re-designation with respect to 
the sales projections.   
The Panel understands that 
the US is not objecting to 
designation of other 
information as HSBI. 
501 Professor Whitelaw calculates the average 
expected returns for [[***]]17  These returns 
provide an ideal benchmark for evaluating the 
market-consistency of MSF loans.  Financing through risk-sharing suppl iers is an important 
funding source for the development of Airbus and Boeing aircraft.  Indeed, risk-sharing 
suppliers financed an estimated 60% of the 
development costs for the Boeing 787.
18 The Panel sustains the US 
objection. 
504 Professor Whitelaw demonstrates that the 
average anticipated return for [[***]].  
Subtracting the applicable risk-free rate and premium for general corporate risk, the 
project-specific risk premium derived from 
this data is [[***]].
19  [***]. Thus, in 
calculating a market benchmark, the European Communities applies a fixed project-specific 
risk premium of [[***]]. The Panel sustains the US 
objection. 
511 The methodologies offered by the 
United States to supposedly "cross-check" its 
results do not support the US benchmark.  The 
United States invokes four disparate sources:   
i) A study of equity market risk 
conducted by Ibbotson Associates; 
ii) [[***]] 
iii) An appraisal of the A380 conducted 
by UK analysts;  and 
iv) A European Commission decision 
on the legal status of a loan to a 
regional aircraft manufacturer. The Panel sustains the US 
objection. 
516 heading (b) [[***]] The Panel sustains the US 
objection. 
                                                      
15 [[***]] . 
16 [[***]] . 
17 [[***]] . 
18 [***] . 
19 [[***]] . WT/DS316/R 
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BCI deleted, as indicated [***] 
 
No. of Paragraph, 
Note or Exhibit CONTENT DECISION OF THE 
PANEL 
516 The second "cross-check" proposed by the 
United States fares no better.  The Ellis report 
relies on the negotiating posture adopted (and later abandoned) [[***
20]]  The Ellis report 
latches onto an inflated discount rate proposed 
by [[***]] to reduce the net present value of, 
inter alia , [[***21]]  Contrary to the US 
suggestion, this so-called [[***]] is 
inappropriate as the basis of a benchmark for MSF loans and, in any event, does not support 
the benchmark rates adopted in the 
Ellis report. The Panel sustains the US 
objection. 
517 First , [[***]].  As the Ellis report concedes, 
[[***]]"22  In his report, Professor Whitelaw 
explains that an equity measure is not 
appropriate for MSF loans and overstates the 
risk premium required by market investors.23 The Panel sustains the US 
objection. 
518 Second , even if an equity measure were 
appropriate, [[***24]]  T h i s  i s  n o t  s u r p r i s i n g .   
[[***25]]  As discussed, scholars have rejected 
the Ibbotson data, which substantially 
overstates the equity risk premium.  
Accordingly, the [[***]] – cannot support the 
risk premium derived in the Ellis report. The Panel sustains the US 
objection. 
519 Third , the context in which [[***]] proposed 
its discount rate confirms  that this measure is 
inflated. [[***]] The Panel sustains the US 
objection. 
520 [[***]]   The Panel sustains the US 
objection. 
521 Significantly, [[***]], which was engaged as 
the outside auditor for this transaction, [[***]], 
concluding that it was excessive given the 
risks involved.26  M o r e o v e r ,  [[***]].  Not 
surprisingly, the Ellis report neglects to 
mention these facts. The Panel sustains the US 
objection. 
                                                      
20 [[***]] . 
21 [[***]] . 
22 [[***]] . 
23 [[***]] . 
24 [[***]] . 
25 [[***]] . 
26 For details see Section X. B. WT/DS316/R 
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BCI deleted, as indicated [***] 
 
No. of Paragraph, 
Note or Exhibit CONTENT DECISION OF THE 
PANEL 
522 In sum, it is inappropriate for the United States 
to rely on a discount rate based on a flawed 
equity measure.  And it is particularly inappropriate for the United States to rely on a 
rate [[***]].  For the reasons set out above, as 
an equity measure, this methodology does not call into question the validity of the benchmark rates calculated by the 
European Communities. The Panel sustains the US 
objection. 
528 Fourth , governments based the repayment 
schedule for MSF loans on the Airbus GIE 
A380 business case – not on predictions suggesting a [[***]].  The United States, itself, 
notes that the UK government ultimately "disregarded" EID's advice regarding how to 
structure the repayment schedule.
27  The 
Airbus GIE "baseline" business case for the A380 predicts [[***]].
28  Echoing these 
projections, the UK A380 contract calls for per-aircraft levies [***].  As previously 
discussed, levies paid on deliveries [***]; 
other Member States adopted [***.
29] The UK 
return would then be enhanced through levies paid on deliveries [***].
30 Likewise, private 
commercial actors [[***31]] The Panel accepts the EC 
re-designation with respect to 
the sales projections.  The Panel understands that the US is not objecting to designation 
of other information as HSBI. 
540 The UK A380 contract provides further 
evidence of the linkage between the 
company's business case and the repayment terms for MSF loans.  This contract is structured to ensure an overall return that is well in excess of the minimum return required 
by the 1992 Agreement .  Repayment is 
structured in two phases.  As previously discussed, the first phase calls for per-aircraft levies [***.
32]  When the contract levy is 
applied to the [[***]], principal and interest 
will be repaid within 17 years of the first 
receipt of MSF – as required by the 
1992 Agreement . The Panel sustains the US 
objection. 
                                                      
27 [[***]] . 
28 [[***]]   The delivery forecasts containe d in the business case were pres ented to MSF lenders such as 
the UK government before the execution of MSF agreements.  See [***] . 
29 [***] . 
30 [***] . 
31 [[***]] . 
32 [***] . WT/DS316/R 
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BCI deleted, as indicated [***] 
 
No. of Paragraph, 
Note or Exhibit CONTENT DECISION OF THE 
PANEL 
762 ProFi and Airbus Germany also concluded 
four lease agreements for six special-purpose 
facilities, including one for the Northern runway extension
33.  The term for each of 
these agreements is 20 years.  The amount of 
rent is set to provide the City of Hamburg with a market return of [[***]] on its investment in 
each of the facilities, including a return on capital for the portion of each facility's economic life depleted during the 20 year lease term.
34 The Panel sustains the US 
objection. 
765 and 
footnote 637 In two separate opinions issued on 
23 October 200335, the Experts Committee 
concluded that the terms of all of the leases were consistent with the terms Airbus 
Germany could have secured from a private, 
non-governmental lessor. Before discussing the Experts Committee's findings in detail, the European Communities first addresses the Committee's function as an independent 
appraiser. 
Blanked Footnote 637: [[***]] The Panel sustains the US 
objection. 
801 [[***36]] The Panel sustains the US 
objection. 
804 [[***37]] The Panel sustains the US 
objection. 
806 The European Communities notes that the US 
expert comes to the same conclusion with 
regard to the value of the land.  Also drawing from the Bodenrichtwert, he concludes that the 
land value is between €51.13/m² and 
€61.36/m².
38 [[***]] The Panel sustains the US 
objection. 
                                                      
33 [***] . 
34 Bürgerschaft der Freien und Hansestadt Hamburg, Drs. 18/33, pp. 6-7. (Exhibit EC-562) (Non-BCI). 
35 [[***]] . 
36 [[***]] . 
37 [[***]] .  The estimate of [[***]]  coincides with the Expert Co mmittee's yearly estimations of 
property value in Hamburg.  Compare Gutachterausschuss für Grundstückswerte in Hamburg, 
Der Grundstücksmarkt in Hamburg 2002, 2003, 2004, 2005 , setting an average return on real estate for the 
relevant area at 6,2%. (Exhibit EC-565) (Non-BCI). 
38 Expert Opinion No. 27649/06, Benchmarks for Land Values concerning Hamburg Airbus Site, 
"Mühlenberger Loch," Kreetslag 10, 21129 Hamburg Finkenwerder, 9 October 2006 ("Keunecke Report"), p. 5 
of the English translation (Exhibit US-189). WT/DS316/R 
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BCI deleted, as indicated [***] 
 
No. of Paragraph, 
Note or Exhibit CONTENT DECISION OF THE 
PANEL 
807 Drawing from a median value of €56,25/m2 
and applying a return on real estate of [[***]], 
a market rent would amount to €3,70/m2 per 
year, or €0,30/m2 per month.  This is in 
accordance with the rent paid by Airbus 
Germany. The Panel sustains the US 
objection. 
808 The difference between the assumptions of the 
Hamburg real estate Experts Committee and 
that of the expert commissioned by the United States lies in the applicable return on 
real estate, set at 9 to 12 % in the Keunecke 
Report as opposed to [[***]] of the Expert 
Committee. The Panel sustains the US 
objection. 
816 Assuming, conservatively, that the properties 
represented in the report cited by 
Dr. Keunecke have an average economic life 
of 40 years, a ratio of rent revenue to value of between 6.0 percent to 8.5 percent represents an actual return of between 5.2 percent and 8.0 percent, respectively. The median ROI of 
rent revenue to value included in the report's 
data ( i.e., 7.2 percent) represents an actual 
return of 6.2 percent, [[***
39] The Panel sustains the US 
objection. 
830 Before discussing the Committee's appraisal, 
the European Communities offers a general 
note about the Committee's approach. [[***]] The Panel sustains the US 
objection.  
831 [[***]] The Panel sustains the US 
objection. 
833 The Experts Committee assessed the market 
consistency of the Agreement separately with 
respect to each facility. Each of these 
agreements follows the method of the Experts 
Committee in determining the market rent. The actual figures for each agreement are laid down in a report to the Hamburg Parliament of 
January 2007.
40  
As a basis for its assessment, [[***]].  The 
Experts Committee – and the report to the 
Hamburg Parliament referred to directly above 
– also expressed the required rent to achieve a 
[[***]] actual return on investment (ROI) as a 
percentage of the amount invested to 
determine the amount of the total annual rent 
payment. The annual rent for each facility, including the actual ROI and the amount of The Panel sustains the US 
objection. 
                                                      
39 Gutachterausschuss für Grundstückswerte in Hamburg, Der Grundstücksmarkt in Hamburg 2002, 
2003, 2004, 2005, (Exhibit EC-565) (Non-BCI). 
40 Bürgerschaft der Freien und Hansestadt Hamburg, Drs. 18/33 (Exhibit EC-562) (Non-BCI). WT/DS316/R 
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No. of Paragraph, 
Note or Exhibit CONTENT DECISION OF THE 
PANEL 
the investment repaid to compensate the investor for the consumed value of each 
facility ( i.e., depreciation), varies from [[***]] 
depending on the useful life of the relevant facility (from 20 to 50 years). 
834 [[***41]]42  The Panel sustains the US 
objection. 
835 [[***]]. The Panel sustains the US 
objection.  
836 [[***]]43 The Panel sustains the US 
objection. 
837 [[44]].45 The Panel sustains the US 
objection. 
838 [[***]] The Panel sustains the US 
objection. 
839 [[***]].  The City of Hamburg has not, 
therefore, conferred a "benefit," or a 
"subsidy," on Airbus Germany, within the 
meaning of Article 1.1 of the SCM Agreement . The Panel sustains the US 
objection. 
850 In contrast, the actual rate of return of [[***]] 
expressed by the Experts Committee includes 
only the first component, actual return on 
investment.  The second component, refund of the investment consumed during the lease, is separately accounted for by the Experts Committee in the actual rental payment for the special-purpose facilities leases. The Panel sustains the US 
objection. 
851 When both components of the Hamburg 
Special Facilities leases are combined ( i.e., 
actual return on investment and the refund of the portion of the investment consumed during 
the lease), the returns – now stated in the same 
manner as Dr. Keunecke (rent/investment 
value) – range from a low of [[***]]. The Panel sustains the US 
objection. 
852 The distinction between real return required of 
[[***]] required by the Hamburg Experts 
Committee and Dr. Keunecke's ROI expressed 
as rent revenue over the value of the property 
is comparable to the difference between the return earned by a bank on a home mortgage and annual mortgage payment as percent of the loan.  A 20 year home mortgage for The Panel sustains the US 
objection. 
                                                      
41 [[***]] . 
42 [[***]] . 
43 [[***]] . 
44 [[***]] . 
45 [[***]] . WT/DS316/R 
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No. of Paragraph, 
Note or Exhibit CONTENT DECISION OF THE 
PANEL 
€ 100,000 with an interest rate of [[***]] 
would required a annual payment of [[***]].  
The values [[***]] are therefore equivalent 
and simply stated on a different basis. The 
Experts Committee specified the former, actual return, and Dr Keunecke measures the 
latter, total payment. 
853 Therefore, to make a fair comparison of the 
Experts Committee's required [[***]] to 
Dr. Keunecke's measure, it is necessary to put them on the same economic basis.  The European Communities first restates Dr. Keunecke's measure of return to that of the Hamburg Experts Committee. The Panel sustains the US 
objection. 
1176 and 
footnote 948 This is not surprising, as the 1998 settlement 
reflected the fair market value of the 
repayment claims of the German government 
against Deutsche Airbus. The amount of the settlement was based on [[***
46]]  Moreover, 
[[***]]  The terms of the 1998 settlement 
therefore did not confer on Deutsche Airbus any benefit within the meaning of Article 1.1 
of the SCM Agreement . The Panel sustains the US 
objection. 
1185 To begin the negotiations, [[***]]  To avoid 
undervaluing its claims, however, the German 
government [[***]] The Panel accepts the EC 
re-designation with respect to 
first set of brackets. 
With respect to remainder of 
the paragraph, the Panel sustains the US objection.   
1186 [[***47***]] The Panel sustains the US 
objection. 
1187 [[***48]] The Panel sustains the US 
objection. 
1188 [[***]] The Panel sustains the US 
objection. 
1189 [[***]] The Panel sustains the US 
objection. 
1190 [[***]] The Panel sustains the US 
objection. 
1191 [[***49]] The Panel sustains the US 
objection. 
                                                      
46 [[                     ]] . 
47 [[                                . ]] 
48 [[.]] 
49 [[***]]  WT/DS316/R 
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No. of Paragraph, 
Note or Exhibit CONTENT DECISION OF THE 
PANEL 
1192 [[***]]50 The Panel sustains the US 
objection. 
1193 Using the [[***]] as a basis, the government 
entered into negotiations with  to determine the settlement amount.  
Ultimately, the German government secured from Deutsche Airbus agreement to a settlement amount higher  than the upper 
[[***]] the German government and Deutsche 
Airbus agreed on a settlement of DM 1.75 billion – [[***]] The Panel sustains the US 
objection. 
1196 On the request of the German government, 
[[***]] The Panel sustains the US 
objection. 
1197 [[***51]] The European Communities fails to 
understand why the United States has not 
addressed [[***]] in its first written 
submission and thereby disclosed only a portion of the pertinent facts known to it.  The United States was obliged, under paragraphs 5 and 15 of the Working Procedures, to provide all its factual evidence with its first written submission.  The Panel sustains the US 
objection. 
1199 As explained by the Appellate Body, a 
"benefit" under Article 1.1(b) of the 
SCM Agreement  is conferred if a recipient 
secures a financial contribution on terms more 
advantageous than those that would have been 
available on the market.52  Like any market 
participants operating at arm's length, the German government and Deutsche Airbus used [[***]] report as an indication of value 
around which to negotiate the terms of 
settlement. The Panel sustains the US 
objection. 
1201 [[***53]] The Panel sustains the US 
objection. 
                                                      
50 [[***]] . 
51 [[***]] . 
52 Appellate Body Report, Canada – Aircraft , para. 157. 
53 [[***]] . WT/DS316/R 
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No. of Paragraph, 
Note or Exhibit CONTENT DECISION OF THE 
PANEL 
1202 Based on additional negotiations, the German 
government and Deutsche Airbus agreed on 
values above [[***]].  Deutsche Airbus paid 
the German government fair value of its 
claims, and thus did not receive any advantage 
relative to that it would have been accorded by a market-based creditor.  No "benefit" was conferred on Deutsche Airbus, within the meaning of Article 1.1(b) of the 
SCM  Agreement . The Panel sustains the US 
objection. 
footnote 963 (footnote to paragraph 1187) 
[[***]]   The Panel sustains the US 
objection. 
1208 Upon the advice of two independent 
accounting firms, [[***]], requested jointly by 
the German government and DASA/MBB, it was determined that the value of KfW's 20 percent stake in Deutsche Airbus, as of 
1 January 1992, [[***]]. The Panel sustains the US 
objection. 
1209 [***] Since the valuation fell below 
DM 505 million, the German government was 
entitled above and beyond the [[***]] value 
ascribed by [[***]], to an additional [[***]] in 
return for KfW's 20% stake. The German Government, MBB and Deutsche Airbus 
negotiated that a transfer price of [[***]] to be 
paid by Deutsche Airbus under the terms of the debtor warrant, along with the [[***]] 
million specified in the 1989 restructuring agreement. Like all other claims, this claim was settled in its entirety for fair market value 
as a part of the 1998 settlement (see above).
54 
Therefore, contrary to the United States' assertions, the transfer was not free of charge
55, and did not provide any benefit to 
Deutsche Airbus.56 The Panel sustains the US 
objection. 
Exhibit EC-98 [[***]] The Panel sustains the US 
objection. 
Exhibit EC-563 [[***]] The Panel sustains the US 
objection. 
Exhibit EC-564 [[***]] The Panel sustains the US 
objection. 
Exhibit EC-20 [[***]] The Panel sustains the US 
objection. 
                                                      
54 The European Communities notes that the terms of the debtor warrant itself were amended in 1992 
(see also above section X.B.2(a)). 
 55 US First Written Submission, para. 550. 
56 Cf. US First Written Submission, para. 555. WT/DS316/R 
 Page F-39 
BCI deleted, as indicated [***] 
 
No. of Paragraph, 
Note or Exhibit CONTENT DECISION OF THE 
PANEL 
Exhibit EC-327 [[***]] The Panel sustains the US 
objection. 
Exhibit EC-336 [[***]] The Panel sustains the US 
objection. 
Exhibit EC-478 [[***]] The Panel sustains the US 
objection. WT/DS316/R 
Page F-40 
BCI deleted, as indicated [***] 
 
ANNEX F-4 
 
COMMUNICATION OF 24 APRIL 2007 
 
European Communities and Certain Member States – Measures  
Affecting Trade in Large Civil Aircraft (DS316 ) 
 
 1. The Panel is in receipt of the EC's letter dated 16 April 2007, submitted in response to the 
direction contained in paragraph 7 of th e Panel's communication of 30 March 2007. 
 2. The Panel notes that in its letter dated 16 April 2007, the EC indicates that it has complied 
with the Panel's direction contained in paragra ph 7 of the communication of 30 March 2007 to specify 
precisely the BCI and HSBI information contai ned in four documents (DS316-EC-HSBI-000088; 
DS316-EC-HSBI-000146;  DS316-EC-HSBI-000199;   and DS316-EC-HSBI-000205) on the 
understanding that, despite the designation of some information in these documents as BCI, the 
documents as a whole, and the remainder of th e HSBI documents which contain BCI designations, 
"will retain their HSBI status and remain accessi ble only in the Secure Room and only to HSBI 
approved persons."  
 3. The Panel notes that the Panel's BCI/HSBI Procedures provide that information designated as 
BCI shall be subject to the restrictions set forth in Section V of the Procedures, while information 
designated as HSBI shall be subject to the restricti ons set forth in Section VI.  The Panel's BCI/HSBI 
Procedures do not make provision for information to  be designated as BCI yet be subject to the 
restrictions applicable to information designated as HSBI.  In other words, the Panel's BCI/HSBI 
Procedures contemplate only two distinct restricti ons for the protection of information which apply 
according to whether information is designated as BCI or as HSBI.    4. The Panel therefore considers that the EC's  "understanding" that, despite the designation of 
certain information in the afore-mentioned docum ents as BCI, the documents as a whole will retain 
their "HSBI status" is not in accordance with th e Panel's BCI/HSBI Procedures or the general 
principles set forth in the Panel's communication of 13 March 2007.  Neither is it consistent with the 
provisions of the BCI/HSBI Procedures concerning th e submission of Redacted Version Appendices.   
 
5. Thus, the Panel directs the EC to submit to the Panel, and serve upon the United States, BCI 
versions of these documents, with information desi gnated as HSBI redacted from them, no later than 
close of business on Tuesday, 1 May 2007 .  Should the EC be unwilling to comply with this ruling, it 
may withdraw these documents from these proceedi ngs.  However, the Panel notes that, in cases 
where a party fails to provide necessary informati on, a panel may draw appropriate inferences from 
this fact.  See Appellate Body Report, Canada – Measures Affecting the Export of Civilian Aircraft 
("Canada – Aircraft "), WT/DS70/AB/R, adopted 20 August 1999, DSR 1999:III, 1377, 
paras. 197-206.    6. The Panel has taken no view as to the proprie ty of the designations of information in the 
afore-mentioned documents as BCI or HSBI.   
 
7. The United States is invited to submit, by close of business on Friday, 27 April 2007 , any 
comments it may have on the propriety of the EC's re-designations of information as BCI or HSBI in 
response to the Panel's rulings of 30 March and 4 April 2007.  WT/DS316/R 
 Page F-41 
BCI deleted, as indicated [***] 
 
ANNEX F-5 
 
COMMUNICATION OF 30 APRIL 2007 
 
European Communities and Certain Member States – Measures  
Affecting Trade in Large Civil Aircraft (DS316 ) 
 
 1. The Panel is in receipt of the EC's lette r dated 25 April 2007.  The Panel acknowledges the 
EC's undertaking to submit to the Panel and serve upon the United States by 1 May 2007, BCI 
versions (from which designated HSBI information has been redacted) of the documents referred to in 
the Panel's communication of 24 April 2007.  
2. In response to the EC's request for an explanation of the Pane l's understanding of the 
BCI/HSBI procedures concerning redacted versions of exhibits, the Panel observes that the issue 
addressed in the Panel's communication of 24 Apr il 2007 was not whether the BCI/HSBI Procedures 
require a Party to produce red acted versions of exhibits per se .  To the extent that the BCI/HSBI 
Procedures are understood not to require redacted vers ions of exhibits, the EC's letter has identified a 
serious problem with those Procedures.  If the EC's  view that, under those Procedures, BCI contained 
in "HSBI documents" should effectively be treated as HSBI were correct, the right of BCI-Approved 
Persons to have access to BCI would be nullified to th e extent that BCI is contained in exhibits also 
containing HSBI.  3. A rule requiring the submission of BCI versions of all exhibits with HSBI redacted from them 
would appear to be a practical means of ensuri ng that Approved Persons are able to view the 
categories of confidential information to  which they are entitled to have access.
1  The Panel therefore 
proposes to amend the BCI/HSBI Procedures to clarif y that there is such a rule.  The alternative 
would seem to be, as the EC observes, to allow HS BI-Approved Persons to red act HSBI from exhibits 
which also contain BCI, and remove the resulting "r edacted version" from the HSBI secure room and 
treat it according to the rules governing BCI.  The Pa nel is reluctant to impose the responsibility to 
redact the exhibits of the other party on the HSBI-Approved Persons of either party.   
 4. The Parties are directed to submit any comments on its proposal, or any other suggestions they may have for ensuring that BCI-Approved Persons  have access to BCI in exhibits which also 
contain HSBI, by close of business on Friday, 4 May 2007 .    
 
 
                                                     
 
1 The Panel notes that BCI versions of exhibits w ith HSBI redacted from them have been submitted by 
the United States in connection with its first submission. WT/DS316/R 
Page F-42 
BCI deleted, as indicated [***] 
 
ANNEX F-6 
 
COMMUNICATION OF 23 MAY 2007 
 
European Communities and Certain Member States – Measures  
Affecting Trade in Large Civil Aircraft (DS316 ) 
 
 1. The Panel is in receipt of the European  Communities' letter da ted 18 May 2007, and the 
United States' comments thereon dated 22 May 2 007.  The Panel acknowledges the EC's undertaking 
regarding preparation of a appropriate Full HSBI Version Appendix, in compliance with paragraph 52 
of the BCI/HSBI Procedures and with the Pa nel's communications of 13 March 2007 and 
14 May 2007, in respect of its answers to questions and second written submission. 
 
2. The Panel has considered the EC's proposed  change to the procedure for verifying HSBI-
Redacted Version Exhibits contained in clause (iii) of paragraph 52(k bis) of the revised version of 
14 May 2007, to enable such verification to be ca rried out by a representative authorized for this 
purpose.  In light of paragraph 24 of the BCI/HSB I Procedures, which provides that, unless otherwise 
specifically provided otherwise, the BCI/HSBI Procedures do not apply to a Party's or Third Party's 
treatment of its own BCI or HSBI, and the lack of  any objection, the Panel accepts the EC's proposed 
amendment.  The relevant amendment to paragraph 52  is incorporated in the attached revised version 
of the BCI/HSBI Procedures.    3. With respect to the EC's suggested am endment to paragraph 52(a) of the BCI/HSBI 
Procedures, the Panel notes that it has previously stated its view that an HSBI Appendix must be a 
readable document on its own, and not simply a co mpilation of paragraphs containing HSBI.  The 
EC's proposal appears to reflect that view, and therefore, with a slight clarifying modification, the Panel accepts that change, which is reflected in  the attached revised version of the BCI/HSBI 
Procedures.   
 
4. With regard to the EC's comments on brack eting of exhibits, the Panel notes that the 
amendments to the BCI/HSBI Procedures it transmitt ed to the Parties on 14 May 2007, incorporating 
new paragraphs 4(d) and 5(b), are intended to incorporate in the BCI/HSBI Procedures themselves the 
requirement, identified by the Panel in various rulings  in this dispute, to identify specifically, through 
the use of brackets, single or double as appropriate, BCI or HSBI contained in, inter alia ,  exhibits.  
Although this requirement was not explicit in the BCI/HSBI Procedures as originally adopted, the 
Panel has concluded that bracketing of BCI contained in exhibits is required by the those Procedures.  
In paragraph 2(a) of its communication of  13 March 2007, the Panel clarified that:  
 
"Parties are not to present entire submissions or exhibits
 categorized as BCI or HSBI, 
but rather are to specifically identify, through the use of brackets as provided for in 
paragraph 4, the information within  those submissions or exhibits  they consider 
should be so designated.... If a Party co nsiders that a submission or exhibit  contains 
BCI it must  identify that information through the use of brackets as envisaged by 
paragraph 4." (Underlining adde d - other emphasis in original )  
The Panel reiterated its view in this regard in  paragraph 3 of its communication of 30 March 2007, 
stating again that "the Parties are not to present en tire submissions or exhibits categorized as BCI or 
HSBI, but rather are to specifically identify, through the use of brackets as provided for in paragraphs 4 and 5, the information within those su bmissions or exhibits they consider should be so 
designated."  Thus, the addition of  paragraphs 4(d) and 5(d) to  the BCI/HSBI Procedures does not 
represent a new requirement.  Rather, these paragra phs incorporate in the text of the BCI/HSBI 
Procedures the substance of the Panel' s previous rulings.  Therefore, the Panel declines to delete them. WT/DS316/R 
 Page F-43 
BCI deleted, as indicated [***] 
 
5. In order to be clear, the Panel confirms that  these amendments take effect as of 14 May 2007.  
That is, the Parties (and Third Parties) are required to bracket the specific information designated as BCI (or HSBI) contained in any exhibit submitte d subsequent to 14 May 2007.  Parties are not, 
however, required to retroactively re-bracket BCI or HSBI contained in exhibits filed prior to 
14 May 2007, except to the extent that the Panel h as already directed them to do so.  This does not 
preclude the possibility that the Panel may direct a Party to re-bracket BCI or HSBI in an exhibit 
submitted prior to that date, on a case-by-case basis.    6. The Panel notes the concern expressed by  the EC regarding the production of non-BCI 
versions of exhibits.  The Panel clarifies that th e BCI/HSBI Procedures, as amended, are not intended 
to require Parties to produce and subm it non-BCI versions of exhibits ( i.e. versions of exhibits from 
which BCI has been redacted), although such vers ions are, of course, welcome.  The Panel has 
reflected this view in a clarifying modification to paragraph 38(b).  7. Concerning exhibits EC-167, EC-551 throug h EC-561 and EC-077, the Panel notes the EC's 
request that the Panel ask the United States "to speci fy what information it wants to be unbracketed 
and to substantiate in what way the alleged over-br acketing is prejudicing its possibility to prepare its 
second written submission before the burden is  put on the European Communities and the 
stakeholders to re-bracket these exhibits."  The EC  makes this request despite having failed to submit 
any responses to the United States' objections to the alleged over-designation of information as BCI in 
the aforementioned exhibits by the applicable deadline.  The Panel further notes that, in its 
communication of 14 May 2007, the Panel sustai ned the United States' objections to the EC's 
designation of information as BCI in the aforementi oned exhibits, and directed the EC to re-submit 
these exhibits, bracketing only the specific BCI contained therein, by 18 May 2007.    8. The Panel recalls that paragraph 2 of the BCI/HSBI Procedures makes it clear that a Party 
submitting information which it seeks to have treated  as BCI is obligated to act in good faith and 
exercise restraint in designating information as BCI , and endeavour to designate information as BCI 
only if its disclosure would cause harm to the originators  of the information.  Similarly, paragraph 9  
of the BCI/HSBI Procedures makes it clear that a Party submitting information which it seeks to have 
treated as HSBI is obligated to act in good faith and exercise restraint in designating information as 
HSBI, and endeavour to designate info rmation as HSBI only if its disclosure would cause exceptional  
harm to the originators  of the information, and sets forth categories of information that may, and may 
not, be designated as HSBI.  It is the Panel's vi ew that the Procedures place the burden on a Party 
designating information as BCI or HSBI to demons trate, if challenged, that the information in 
question satisfies the criteria for such treatment.  The EC's proposed modifications to paragraph 38(d) 
and 52(k bis) would shift this burden, imposing obligations  on the non-submitting Party, and the Panel.  
The  Panel considers that a Party receiving inform ation designated as BCI is not required to identify 
specific information it seeks to ha ve 'debracketed' and justify its  request on the basis that the 
designation of such information as BCI is prejudicial  to its ability to prepare its submissions to the 
Panel.  Nor is it the Panel's obligation to identify to  a Party the portions of exhibits it may wish to 
discuss in its report in order to ascertain whether sp ecific information is considered by the submitting 
Party to be BCI.
1   
 
9. The Panel considers that it is incumbent upon th e EC to comply with the Panel's direction of 
14 May 2007, and declines to direct the United States  to justify its objections as requested by the EC.  
The EC having failed to respond to the US objections to the designation of almost the entirety of the 
afore-mentioned exhibits as BCI, the Panel is not in a position to rule on the question of whether 
specific information in those exhibits  may properly be designated as BCI.2  The Panel notes that, 
                                                      
1 The Panel will, of course, work with the Parties to ensure that any public documents in this dispute do 
not contain BCI or HSBI. 
2 The Panel notes, however, that based on the principles it has articulated in its rulings on the issue of 
designation of information as BCI or HSBI, the Panel ha s difficulty accepting that, for example, portions of the WT/DS316/R 
Page F-44 
BCI deleted, as indicated [***] 
 
pursuant to paragraph 2 of the BCI/HSBI Procedures, the fact that information is not in the public 
domain is only one element to be considered in designating information as BCI.  The EC is directed to comply with the Panel's earlier ruling, and to subm it re-bracketed versions of the afore-mentioned 
exhibits no later than close of business on Wednesday 30 May 2007.   
 
10. Finally, the Panel notes that it does not consider  it necessary to meet with the parties at this 
time to discuss these matters.    11. Based on the foregoing, the Panel declines to incorporate the EC's proposed paragraphs 38(d) 
and 52(k bis) in, and declines to delete paragraphs 4(d), 5(d), and 20 bis from, the BCI/HSBI 
Procedures (revised version of 14 May 2007).  Th e Panel does, however, incorporate the changes 
proposed to paragraph 52 (a) and paragraph 52(k bis) concerning persons authorized to verify the 
redaction of HSBI from exhibits.  A revised ve rsion of the BCI/HSBI Procedures reflecting the 
Panel's rulings is attached. 
 
 
__________  
                                                                                                                                                                    
 
table of contents and the section numbers and headings of specific contractual provisions, or apparently standard 
contractual provisions ( e.g. provisions to the effect that amendments to the agreement shall be in writing) may 
be designated as BCI.