EUROPEAN COMMUNITIES AND CERTAIN MEMBER STATES – MEASURES AFFECTING TRADE IN LARGE CIVIL AIRCRAFT
Document: Understanding on
Date: 12 December 2011
Document codes: WT/DS316/18
Complainant: U.S.
Respondent: EU, France, Germany, Spain, United Kingdom
Third parties: Australia, Brazil, Canada, China, Japan, South Korea
Dispute stage: Retaliation & Arbitration
Agreements cited: Art. 3.1, 3.2, 5, 6.3  Subsidies and Countervailing Measures (SCM)Art. XVI:1  GATT 1994Art. 1, 2  Subsidies and Countervailing Measures (SCM)Art. III:4  GATT 1994

EUROPEAN COMMUNITIES AND CERTAIN MEMBER STATES –
MEASURES AFFECTING TRADE IN LARGE CIVIL AIRCRAFT

Recourse to Article 7.9 of the SCM Agreement and
Article 22.2 of the DSU by the United States

 The following communication, dated 9 December 2011, from the delegation of the
United States to the Chairperson of the Dispute Settl ement Body, is circulated pursuant to Article 7.9
of the SCM Agreement and Article 22.2 of the DSU.

 The United States considers that the European Union ("EU") and France, Germany, Spain,
and the United Kingdom ("certain member States") have failed to comply with the recommendations
and rulings of the Dispute Settleme nt Body ("DSB") in the dispute (DS316) (" EC – Large
Civil Aircraft"). Pursuant to Article 22.2 of the Understanding on Rules and Procedures Governing
the Settlement of Disputes ("DSU") and Article 7.9 of the Agreement on Subsidies and Countervailing
Measures ("SCM Agreement"), the United States requ ests authorization from the Dispute Settlement
Body ("DSB") to take countermeasures with respect to the European Union ("EU") at an annual level
commensurate with the degree and nature of the adverse effects caused to the interests of the
United States by the failure of the EU and certain member States to withdraw subsidies or remove
their adverse effects in compliance with the reco mmendations and rulings of the DSB. This amount
corresponds to the annual value of lost sales, of imports of US large civil aircraft
1 displaced from the
EU market, and of exports of US large civil airc raft displaced from third country markets. The
amount will be updated annually using the most rece nt publicly available data. Based on currently
available data in a recent period, the United St ates estimates this figure to be between $7 and
$10 billion per year.
 On 20 July 2005, the DSB established a panel at the request of the United States to examine
measures by the European Union and certain member States affecting trade in large civil aircraft.
The panel found that the EU and certain member St ates were providing subsidies inconsistent with
their obligations under the SCM Agreement. On 1 June 2011, the DSB adopted its recommendations
in EC – Large Civil Aircraft . The DSB recommendations and rulings include, inter alia , the
recommendation that the Member granting each subs idy found to have resulted in such adverse
effects bring the subsidy into compliance with its obligations under the SCM Agreement.2
 Under Article 7.9 of the SCM Agreement, the EU and certain member States had six months
from the date of adoption of the recommendation and ru lings of the DSB to withdraw the subsidies or
take appropriate steps to remove the adverse effects of the subsidies. In the view of the United States,

1 Terms used in this request have the same meaning as in the reports adopted by the DSB.
2 WT/DS316/AB/R, para. 1418; WT/DS316/R, paras. 8.6 and 8.7.

the EU and certain member States failed to comply with the recommendations and rulings of the DSB
within that period. The parties have not reached agreement on compensation. Therefore, the United
States is entitled to authorization by the DSB to take countermeasures under Article 22 of the DSU
and Article 7.9 of the SCM Agreement.
 In considering what countermeasures to take , the United States followed the principles and
procedures set forth in Article 22.3 of the DSU. As required by Article 7.9 of the SCM Agreement,
the countermeasures are commensurate on an annual basis with the degree and nature of the adverse
effects determined to exist. The United States consid ers that it is neither practicable nor effective to
suspend concessions or other obligations on imports of EU goods up to a value of approximately
US $10 billion. The United States also considers that, given the degree and nature of the adverse
effects, the circumstances are "serious enough" with in the meaning of Article 22.3(c) of the DSU.
Therefore, the United States may suspend concessions or other obligations under the General
Agreement on Trade in Services.
 The countermeasures would consist of one or more of the following:

(1) suspension of tariff concessions and re lated obligations (including most-favored-
nation obligations) under the General Agreement on Tariffs and Trade 1994 on a list
of products of the EU and certain member States to be drawn from the Harmonized
Tariff Schedule of the United States; and
(2) suspension of horizontal or sectoral conc essions and obligations contained in the US
Schedule of Specific Commitments with regard to all services defined in the Services
Sectoral Classification List, except for financial services (sector 7).
 The United States is requesting that a meeti ng of the Dispute Settlement Body be convened
on 22 December 2011, to consider this matter.