WORLD TRADE  
ORGANIZATION  WT/DS316/12 
23 July 2010 
 (10-3984) 
 Original:   English 
  
 
EC AND CERTAIN MEMBER STATES – MEASURES AFFECTING TRADE  
IN LARGE CIVIL AIRCRAFT 
 
Notification of an Appeal by the European Union
 
under Article 16.4 and Article 17 of the Understanding on Rules  
and Procedures Governing the Settlement of Disputes (DSU),  
and under Rule 20(1) of the Working Procedures for Appellate Review  
   The following notification, dated 21 July 2010, from the Delegation of the European Union, is 
being circulated to Members. 
 
_______________ 
   Pursuant to Article 16.4 and Article 17.1 of the DSU  the European Union hereby notifies to 
the Dispute Settlement Body its decision to appeal  to the Appellate Body certain issues of law 
covered in the Panel Report and cer tain legal interpretations devel oped by the Panel in the dispute 
European Union – Measures Affecting Trade in Large Civil Aircraft  (WT/DS316).  Pursuant to 
Rule 20(1) of the Working Procedures for Appellate Review , the European Union simultaneously files 
this Notice of Appeal with the Appellate Body Secretariat. 
 
 The European Union is restricting its appeal to  those errors that it believes constitute serious 
errors of law and legal interpretation that need to  be corrected.  Non-appeal of an issue does not 
signify agreement therewith.  The European Union also believes that it may not be necessary for the 
Appellate Body to decide all the issues raised in th is notice of appeal since some may become moot as 
a result of decisions on other issues. 
 
 For the reasons to be further elaborated in  its submissions to the Appellate Body, the 
European Union appeals, and requests the Appellate Bo dy to reverse, modify or declare moot and of 
no legal effect the findings, conclusions and reco mmendations of the Panel, with respect to the 
following errors of law and legal interp retations contained in the Panel Report
1: 
 
                                                      
1Paragraph numbers provided in footnotes to the follo wing description of the errors of the Panel are 
intended to indicate the primary instance of the errors. Of course these errors have consequences throughout the 
report and the European Union also appeals all findings and conclusions deriving from or relying on the 
appealed errors, and in particular the relevant finding s and conclusions in Sections 8.1 and 8.2 of the Panel 
Report, and also in particular all the recommendations of the Panel in Sections 8.6 and 8.7 of the Panel Report.  WT/DS316/12 
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I. Preliminary Issues 
A. Legal irrelevance of pre-1995 subsidies (Section VII.C.2 of the Report) 
1. The Panel erred in its interpretation and application of Article 5 of the SCM Agreement  when 
concluding that all alleged actionable subsidies gr anted by the European Union prior to 1 January 
1995 were included in the temporal scope of these proceedings.
2 
B. Identity of recipient, pass through, extinc tion, extraction and withdrawal of subsidy 
(Section VII E.1 of the Report) 
2. The Panel erred in its interpre tation and application of the SCM Agreement , in particular 
Articles 1, 4.7, 7.8, 5 and 6.3, by failing to dist inguish the recipients of the alleged subsidies over 
time, and by failing to properly account for sales, transfers and changes in ownership of assets and 
companies and the extinction, extraction, rem oval or withdrawal of the alleged subsides.3 
3. In this respect the Panel also failed to make an objective assessment of the law and facts 
contrary to Article 11 of the DSU  in a number of ways.  In particular, the Panel failed to offer 
reasoned and adequate explanations for its findings that the European Union "did not argue" that the 
transactions were at arm's length4, that certain of the transactions were in fact not at arm's length5, that 
the SEPI and Daimler extractions did not remove  the funds from use for LCA development and 
manufacture6 and that cash was not truly "withdrawn" from CASA.7  The Panel also lacked a 
sufficient evidentiary basis for these findings.  The Panel's findings  concerning the provision and 
removal of money to a state-owned entity by it s government shareholder are also internally 
inconsistent and incoherent.8 
4. The Panel erred in its interpretation and a pplication of Articles 4.7 and 7.8 of the 
SCM Agreement in recommending that the European Union "withdraw the subsidy" and "remove the 
adverse effects or ... withdraw the subsidy", to the extent that the European Union had already 
done so.9 
II. MSF Issues (Section VII E.2 of the Report) 
5. The Panel erred in failing to ta ke account of Article 4 of the 1992 Agreement in interpreting 
and applying the notion of "benefit" under Article 1.1(b) of the SCM Agreement .10  
6. The Panel erred in its interpretation and application of Article 1.1(b) of the SCM Agreement  
and under Article 11 of the DSU  in making findings regarding project -specific risk premia for various 
Airbus LCA programmes that fail to apply the Panel' s own standard and are made without a sufficient 
evidentiary basis for these findings and w ithout adequately explaining these findings.11 
                                                      
2Panel Report, para. 7.65 and the findings in paras. 7.44 to 7.64; and para. 7.326 and the findings in 
paras. 7.322 to 7.325. 
3Panel Report, para. 7.200 and the findings in paras. 7.286 to 7.289 and 7.190 to 7.199 (pass-through); 
para. 7.255 and the findings in paras. 7.286 to 7.289 and 7.214 to 7.254 (extinction); paras. 7.286 to 7.289 and 
7.266 to 7.285 (extraction and withdrawal); paras. 7.725 to 7.728 (para. 7.728, in particular). 
4Panel Report, para. 7.249. 
5Panel Report, para. 7.249 and footnote 2175. 
6Panel Report, paras. 7.275 to 7.276 and 7.283 to 7.285. 
7Panel Report, paras. 7.284 to 7.285. 
8Panel Report, paras. 7.1400 to 7.1403, 7.284 to 7.285 and 7.289.  
9Panel Report, paras. 8.6 and 8.7. 
10Panel Report, paras. 7.388 to 7.389. 
11Panel Report, paras. 7.469, 7.481 and 7.483 to 7.490, including Table 7, and para. 8.1(a).  WT/DS316/12 
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7. The Panel erred in its interpretation and application of Article 1.1(b) of the SCM Agreement  
and under Article 11 of the DSU  in finding short-comings of the European Union's risk-sharing 
supplier benchmark for LA/MSF without a sufficient evidentiary basis, without assessing the totality 
of the evidence, and without adequate explanation.12 
8. To the extent that the Panel has made findings with respect to the relevance of the number of 
sales over which full repayment is expected to th e appropriateness of the market rate of return13, the 
Panel made an error under Article 1.1(b) of the SCM Agreement . 
III. Export Subsidy Findings (Section VII E.4 of the Report) 
9. The Panel erred in its interpretation and appli cation of Article 3.1(a) and footnote 4 of the 
SCM Agreement , including but not limited to the terms "subs idies", "contingent/c ondition", "tied-to", 
"actual or anticipated" and "export performance".14 
10. In reaching those findings the Panel also erred under Article 7.2 of the DSU  in failing to 
address the relevant provisions cited by  the parties, Article 12.7 of the DSU  in failing to set out or to 
set out adequately the basic rationale behind its  findings and recommendati ons and under Article 11 
of the DSU  in failing to make an objective assessment of  the matter before it, including an objective 
assessment of the law and the facts. 
IV. EIB Measures (Section VII E.5 of the Report) 
11. If the United States appeals the Panel's findings  on the lack of specificity of the EIB 
measures, then the European Union appeals the Pane l's findings that such measures confer a benefit 
and requests the Appellate Body to rule that the Pa nel erred in its interpre tation and application of 
Article 1.1(b) of the SCM Agreement  and failed to make an objective assessment of the law and the 
facts as required by Article 11 of the DSU  in its findings that the challenged EIB measures confer a 
benefit.15 
V. Infrastructure (Section VII E.6 of the Report) 
12. The Panel erred in its interpretation and a pplication of Article 1.1(a)(1)(iii) of the 
SCM Agreement in finding that the Mühlenbe rger Loch measures, the Bremen runway extension and 
the ZAC Aéroconstellation measures c onstitute financial contributions.16 
13. The Panel erred in its interpretation and application of Article 1.1(b) of the SCM Agreement  
in finding that the Mühlenberger Loch measure s, the Bremen runway extension and the ZAC 
Aéroconstellation measures confer a benef it on Airbus Deutschland and Airbus France.17 
                                                      
12Panel Report, paras. 7.480 and 7.481. 
13Panel Report, para. 7.397. 
14Panel Report, para. 8.1(a)(ii) and the "findings" in light of which such conclusion is reached, 
including para. 7.689 (conclusion on export subsidies), para. 7.680 (A380 Germany), para. 7.681 (A380 Spain), 
para. 7.683 (A380 United Kingdom), para. 7.678, and the other findings in paras. 7.612 to 7.716 of the Panel 
Report. 
15Panel Report, para. 7.885 and the other findings in paras. 7.717 to 7.881 of the Panel Report on which 
these findings are based or "in light of" which these findings are made.  
16Panel Report, paras. 7.1084, 7.1121, 7.1179, and 8.1(b)(i) to (iii). 
17Panel Report, paras. 7.1097, 7.1134, 7.1190 and 8.1(b)(i) to (iii). WT/DS316/12 
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VI. Aerospatiale Equity Contributions (Section VII E.9 of the Report) 
14. The Panel erred in finding that a "benefit" w as conferred by virtue of capital contributions 
within the meaning of under Article 1.1(b) of the SCM Agreement by the French State to a state-
owned company, Aérospatiale
18 and in its interpretation of the term "benefit" in Article 1.1(b).19 
15. The Panel erred in its interpretation and application of Article 1.1(b) of the SCM Agreement 
and Article 11 of the DSU  in making findings without a sufficient evidentiary basis concerning 
reasonable market-based rates of return, and in the absence of coherent reasoning in its assessment of 
evidence concerning the performan ce of Aérospatiale's peers.20 
16. The Panel erred in finding that a "benefit" w ithin the meaning of Article 1.1(b) of the SCM 
Agreement  was conferred by virtue of the transfer by the French State to a state-owned company, 
Aérospatiale, of the French Stat e's shares in Dassault Aviation and erred under Article 11 of the DSU 
in finding such a "benefit", without a sufficient evidentiary basis to support that finding.21 
VII. RT&D Issues (Section VII E.10 of the Report) 
17. The Panel erred in its interpretation and application of Article 2.1(a) of the SCM Agreement  
when concluding that R&TD support granted unde r each of the Framework Programmes constituted 
specific subsidies.22 
18. The Panel erred in its interpretation a nd application of Article 6.2 of the DSU  in concluding 
that the Spanish PROFIT programme23 and French R&TD funding24 had been properly identified in 
the US panel request. 
VIII.  Adverse Effects (Section VII F of the Report) 
19. The Panel erred in its interpretation and applica tion of Articles 5(c), 6.3(a), 6.3(b) and 6.3(c) 
of the SCM Agreement  in finding that the effect of the subsidies constitutes serious prejudice to the 
interests of the United States, including displacement of imports from the European Union, displacement of exports from certain third country ma rkets or threat thereof and significant lost sales 
in the same market.
25 
20. In reaching those findings the Panel also erred under Article 12.7 of the DSU  in failing to set 
out or to set out adequately the basic rationa le behind its findings a nd recommendations and under 
Article 11 of the DSU  in failing to make an objective assessment of the matter before it, including an 
objective assessment of the law and the facts. 
                                                      
18Panel Report, paras. 7.1367, 7.1371, 7.1375, 7.1380 and 8.1(d)(i). 
19Panel Report, paras. 7.1364, 7.1366, 7.1370, 7.1374 and 8.1(d)(i). 
20Panel Report, paras. 7.1360, 7.1367, 7.1371, 7.1375, 7.1380 and 8.1(d)(i). 
21Panel Report, paras. 7.1409, 7.1411, 7.1412, 7.1414 and 8.1(d)(ii). 
22Panel Report, paras. 7.1566 and paras. 7.1562 to 7.1565; para. 8.1(e). 
23Panel Report, paras. 7.1422 and paras. 7.1420 to 7.1421; para. 8.1(e). 
24Panel Report, paras. 7.149 and 7.147 to 7.148; para. 8.1(a). 
25Panel Report, paras. 8.2(a), (b), (c) and (d) and the "findings" in light of which such conclusions are 
reached, including the findings set out in  the following paragraphs of this no tice of appeal and the other findings 
in paras. 7.1610 to 7.2186 of the Panel Report.  WT/DS316/12 
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A. 1992 Agreement 
21. The Panel erred in its interpretation a nd application of Article 5(c) of the SCM Agreement  and 
Articles 12.7 and 11 of the DSU  in failing to take account of the fact that the United States had 
expressly consented to all subsidies covered by the 1992 Agreement  and could therefore not suffer 
serious prejudice as a result of such subsidies.26 
B. Subsidized product 
22. The Panel erred in its interpretation and applica tion of Articles 5(c), 6.3(a), 6.3(b) and 6.3(c) 
of the SCM Agreement  and Articles 12.7 and 11 of the DSU  when it found that it did not need to 
independently and objectively make a dete rmination regarding the subsidized product.27 
C. Displacement or threat thereof 
23. The Panel erred in its interpretation and applica tion of Articles 5(c), 6.3(a) and 6.3(b) of the 
SCM Agreement  and Articles 12.7 and 11 of the DSU  when it found that there is only one, rather than 
several distinct product markets, and by finding th at it could therefore assess displacement, significant 
price suppression and price depression on the basis of a single product market, thereby exaggerating 
the extent of the displacement and price suppression and depression it found.28  
24. The Panel erred in its interpretation and app lication of Articles 5(c) and 6.3(b) of the 
SCM Agreement and Articles 12.7 and 11 of the DSU w hen it found that there was displacement in the 
markets of Mexico and Brazil, although the United States did not lose market share in those markets.29 
25. The Panel erred in its interpre tation and application of Articles 5(c) and 6.3(a) of the 
SCM Agreement  and Articles 12.7 and 11 of the  DSU when it found that the subsidies caused 
displacement in the EU market.30 
26. The Panel erred in its interpretation and app lication of Articles 5(c) and 6.3(b) of the 
SCM Agreement  and Articles 12.7 and 11 of the DSU  when it found that the subsidies caused 
displacement in the third country markets of Austra lia, Brazil, China, Chinese Taipei, Korea, Mexico 
and Singapore.31 
27. The Panel erred in its interpretation and app lication of Articles 5(c) and 6.3(b) of the 
SCM Agreement  and Articles 12.7 and 11 of the DSU  when it found, that the subsidies caused a threat 
of displacement in the third country market of India.32 
                                                      
26Panel Report, para. 8.2  and any findings that may be considered to support this conclusion. 
27Panel Report, paras. 7.1650, 7.1652, 7.1653, 7.1654,  7.1656, 7.1662 and 8.2. 
28Panel Report, paras. 7.1742, 7.1751, 7.1755, 7.1 756, 7.1757, 7.1758, 7.1777, 7.1779, 7.1780, 7.1781, 
7.1782, 7.1786, 7.1788 to 89 and 7.1790 to 7.1791 and 8.2( a), 8.2(b) and 8.2(c), as well as any other paragraphs 
that rely on such finding. 
29Panel Report, paras. 7.1785, 7.1786, 7.1791, 7.1993, 7.2025 and 8.2(b). 
30Panel Report, paras. 7.1985, 7.1986, 7.1993, 7.2025 and 8.2(a). 
31Panel Report, paras. 7.1985, 7.1986, 7.1993, 7.2025 and 8.2(b). 
32Panel Report, paras. 7.1985, 7.1986, 7.1993, 7.2025 and 8.2(b). WT/DS316/12 
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D. Lost sales 
28. The Panel erred in its interpretation and a pplication of Articles 5 and 6.3(c) of the 
SCM Agreement  and Articles 12.7 and 11 of the DSU , when it found that the A380 Emirates Airlines 
order constituted a significant lost sale.
33 
29. The Panel erred in its interpretation and a pplication of Articles 5 and 6.3(c) of the 
SCM Agreement  and Articles 12.7 and 11 of the DSU  when it found that the subsidies caused 
significant lost sales in the easyJet, Air Berlin, Czech  Airlines, Air Asia, Singapore Airlines, Emirates 
and Qantas sales campaigns.34 
E. Serious prejudice 
30. The Panel erred in its interpretation and application of Articles 5 and 6.3 of the 
SCM Agreement when it found that it need not make a further finding that the displacement, threat of 
displacement and lost sales it found were caused by the subsidies each amount to serious prejudice to the interests of the United States.
35 
F. Price suppression/depression 
31. The Panel erred in its interpretation and a pplication of Articles 5 and 6.3(c) of the 
SCM Agreement  and Articles 12.7 and 11 of the DSU  in finding that it need not assess price 
suppression on the basis of the individual product markets.36 
32. The Panel erred in its interpretation and a pplication of Articles 5 and 6.3(c) of the 
SCM Agreement  and Articles 12.7 and 11 of the DSU in finding that there exists price suppression and 
price depression for the 777.37 
G. Causation with respect to subsidies other than MSF 
33. The Panel erred in its interpretation and applica tion of Articles 5 and 6.3(a), 6.3(b) and 6.3(c) 
of the SCM Agreement  and Articles 12.7 and 11 of the DSU  in failing to distinguish the effects of 
non-MSF alleged subsidy measures from MSF measures in assessing adverse effects and in failing to 
provide a reasoned and adequate  explanation as to how the following measures could cause or 
contribute to causing adverse effects: 
• the Mühlenberger Loch measures;  the Brem en airport runway extension;  the ZAC 
Aéroconstellation measures;  the grants  provided by Germany and Spain for 
construction of facilities in Nordenham, Germany, and Sevilla, La Rinconada, 
Toledo, Puerto de Santa Maria and Puerto Real, Spain;  and the grants provided by the governments of Andalusia and Castilla-L a Mancha in Puerto Real, Sevilla, and 
Illescas (Toledo)
38; 
 
• the capital contributions by the French Stat e and Crédit Lyonnais to Aérospatiale and 
the transfer by the French State of its shares in Dassault Aviation to Aérospatiale39;  
 
                                                      
33Panel Report, para. 7.1832, and 8.2(d). 
34Panel Report, paras. 7.1985, 7.1986, 7.1993, 7.2025 and 8.2(d). 
35Panel Report, paras. 7.1736 and 8.2.  
36Panel Report, paras. 7.1854 to 7.1855 and 7.1860 to 7.1861. 
37Panel Report, paras. 7.1854 to 7.1855 and 7.1860 to 7.1861. 
38Panel Report, paras. 7.1958, 8.1(b), and 8.2. 
39Panel Report, paras. 7.1957, 8.1(d), and 8.2.  WT/DS316/12 
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• the acquisition by Kreditanstalt für Wide raufbau (KfW) of a 20 percent equity 
interest in Deutsche Airbus in 1989, and the 1992 transfer by KfW of its 20 percent equity interest in Deutsche Airbus to Messerschmitt-Bölkow-Blohm GmbH (MBB)
40;  
and 
 
the provision of R&TD funding pursuant to:  the Second, Third, Fourth, Fifth, and Sixth EC 
Framework Programmes;  the French government grants between 1994-2005;  the German Federal 
government grants under the LuFo I, II and III pr ogrammes;  the German sub-Federal government 
grants from the Bavarian authorities under the OZB and Bayerisches Luftfahrtforschungsprogramm, 
from the Bremen authorities under the AMST progra mmes, and from the Hamburg authorities under 
the Luftfahrtforschungsprogramm;  Spanish government loans from the PROFIT and PTA 
programmes; and UK government grants  under the CARAD and ARP programmes.41 
 
__________ 
 
                                                      
40Panel Report, paras. 7.1957, 8.1(c), and 8.2. 
41Panel Report, paras. 7.1959, 8.1(e), and 8.2.