UNITED STATES – MEASURES AFFECTING TRADE IN LARGE CIVIL AIRCRAFT (SECOND COMPLAINT)
Document: Communication from the United States
Date: 26 September 2012
Document codes: WT/DS353/15
Complainant: EU
Respondent: U.S.
Third parties: Australia, Brazil, Canada, China, Japan, South Korea
Dispute stage: Implementation & Compliance
Agreements cited: Art. 3.1, 3.2, 5, 6.3, 1.1, 2  Subsidies and Countervailing Measures (SCM)Art. III:4  GATT 1994

UNITED STATES – MEASURES AFFECTING TRADE
IN LARGE CIVIL AIRCRAFT
(SECOND COMPLAINT)

Communication from the United States

 The following communication, dated 23 Sept ember 2012, from the delegation of the
United States to the Chairperson of the Dispute Settle ment Body, is circulated at the request of that
delegation.

On behalf of the United States I am pleased to provide the attached notification of the
withdrawal of subsidies and removal of adverse effects in the dispute (DS353). Through the steps identified in
the notification, the United States has fully comp lied with the recommendations and rulings of the
Dispute Settlement Body in this dispute.

We request that you please circulate the enclosed notification to the DSB.

NOTIFICATION OF THE WITHDRAWAL OF SUBSIDIES
AND REMOVAL OF ADVERSE EFFECTS IN

1. On March 23, 2012, the Dispute Settlement Body ("DSB") of the
("WTO") adopted its recommendations and rulings with respect to the dispute (WT/DS353). By that action,
the DSB adopted findings that the United States caused adverse effects to the interests of the
European Union ("EU") within the meaning of Article 5(c) of the Agreement on Subsidies and
Countervailing Measures ("SCM Agreement") through the use of certain subsidies, and recommended
that the United States "take appropriate steps to remove the adverse effects or . . . withdraw the
subsidy."
1
2. The United States, in consultation with the releva nt federal, state, and local authorities, has
carefully considered the recommendations and rulings of the DSB. In light of these and other relevant
considerations, the United States has taken a number of actions to withdraw the subsidies found to
have caused adverse effects or to remove their adverse effects.
3. The National Aeronautics and Space Administration ("NASA") has modified the rights
accorded to the parties under the contracts listed in Annex A so as to make them consistent with
commercial practice. These modifications apply to all of the NASA contracts covered by the
recommendations and rulings of the DSB. NASA has made identical modifications, as necessary,
with regard to contracts subsequent to those cove red by the recommendations and rulings of the DSB,
without prejudice to the U.S. view that those cont racts were not subsidies causing adverse effects to
EU interests. These contracts are also listed in Annex A.
4. NASA has terminated the Advanced Com posites Technology, High Speed Research,
Advanced Subsonic Technology, High Performance Computing and Communications, Quiet Aircraft
Technology, Vehicle Systems, and Research and Technology Base programs, and reduced funding for
aeronautics research contracts with private partie s under other aeronautics research programs. NASA
has changed its policies so as to remove limitati ons on access to the results of NASA research and
development efforts, including by ceasing the use of limited exclusive data rights ("LERD") clauses.
NASA has implemented a policy of seeking greater prompt disclosure of the results of its sponsored
research when it purchases research and development services from private entities.
5. The U.S. Department of Defense ("DoD") has modified the rights accorded to the parties
under the cooperative agreements, t echnology investment agreements , and Other Transactions listed
in Annex B so as to make them consistent with co mmercial practice. The modifications apply to all
of the DoD assistance instruments covered by th e recommendations and rulings of the DSB. DoD
made identical modifications with regard to contracts subsequent to those covered by the
recommendations and rulings of the DSB, without prejudice to the U.S. view that those contracts were
not subsidies causing adverse effects to EU interests. These contracts are also listed in Annex B.
6. DoD has ceased funding of the following programs: Dual Use Application and Dual Use
Science and Technology (Program Element (" PE") 0602305F); Navy Manufacturing Technology
("ManTech") (PE 0603771F); Air Force ManTech (PE 0708011F); Defense Advanced Research
Projects Agency research on the Joint Strike Fighter (PE 0603800E); Army research related to the

1 , WT/DS353/R,
para. 8.9.

Comanche (PE 0604223A); Air Force research on th e B-2 (PE 0604240F); and Air Force research on
A-6 Squadrons (PE 0604240F).
7. The United States enacted legislation termin ating the Foreign Sales Corporation and
Extraterritorial Income ("FSC/ETI") tax benefits.
8. The United States has confirmed that Boeing did not use FSC or ETI tax benefits after 2006.
9. The State of Washington is applying rates of Business and Occupancy Tax ("B&O") for
aerospace manufacturing and retailing consistent with Article 5(c) of the SCM Agreement.
10. The City of Wichita is applying its Industrial Revenue Bond ("IRB") program in a manner
consistent with Article 5(c) of the SCM Agreemen t. It has not provided any IRBs to Boeing since
2007.
11. In light of the conditions of competition in the ma rket for large civil aircraft and actions taken
by the United States, any adverse effects of the su bsidies in question have ceased to exist, or a
"genuine and substantial rela tionship of cause and effect" 2 no longer exists between the subsidies
subject to the recommendations and rulings of the DS B and any adverse effects within the meaning of
Article 5(c) of the SCM Agreement.
12. Through these actions, the United States has w ithdrawn the subsidy or removed the adverse
effects with respect to each of the subsidies found to be inconsistent with Article 5(c) of the SCM
Agreement: payments and access to facilities, equipment, and employees provided under NASA
procurement contracts, payment and access to facilities provided pursuant to DoD assistance
instruments, the FSC/ETI measures, B&O tax rate reductions, and IRB subsidies. The United States
notes that this holds true with regard to a ll of the Boeing aircraft covered by the DSB
recommendations and rulings, namely the Boeing 737 and 787, as well as the Airbus aircraft with
respect to which the adverse effects existed, namely, the A320, A330, and Original A350.

2 ,
WT/DS353/AB/R, para. 913.

ANNEX A

NAS1-11668
NAS1-15148
NAS1-18862
NAS1-18889
NAS1-20546
NAS1-20090
NAS1-20103
NAS1-20267
NAS1-20268
NAS1-97040
NAS3-25965
NAS3-27018
NAS3-27238
NAS1-15325
NAS1-17145
NAS1-17147
NAS1-18027
NAS1-18028
NAS1-18037
NAS1-18377
NAS1-18378
NAS1-18574
NAS1-18586
NAS1-18762
NAS1-18763
NAS1-18954
NAS1-19060
NAS1-19184
NAS1-19703
NAS1-20014
NAS1-20095
NAS1-20096
NAS1-20275
NAS1-20341
NAS1-20342
NAS1-99150
NAS2-10955
NAS2-11250
NAS2-11485
NAS2-11966
NAS2-12393
NAS2-12876
NAS2-12913
NAS2-13070
NAS2-13312
NAS2-13625
NAS2-14181
NAS3-25421
NAS3-25454
NAS3-25796
NNA06BC41C
NAS2-14096
NAS2-14090
NAS2-14091
NCC1-388
NAS1-19245
NAS1-19345
NAS1-19349
NAS1-19360
NAS1-19568
NAS1-20013
NAS1-20220
NAS3-25446
NAS3-25963
NAS1-00086
NNL04AA11B
E3104D
L70828D
L71159D
L71310D
L71543D
NAS1-00106
NAS1-01057
NAS2-12468
NCC1-287
NCC1-343
NNL05AA36C
NNL06AA63T
NAS1-00092
NAS1-99070
NAS3-25447
NNL04AA29C
NNL04AA30C
NNL04AA36C
NNL05AB29T
NNA06BC41C
NNA08BA33C
NNA09DA56C
NNC07CB38C
NNC07CB76C
NNC08CA47C
NNC08CA70C
NNC08CA81C
NNC08CA88C
NNC08CA93C
NNC09CA32C
NNC10AA02A
NNC10AA03A
NNC10BA05B
NNC10CA40C
NNC10CA40C
NNC11CA12C
NNC11CA20C
NNC11QA17P
NNC11VA99P
NNC12CA05C
NAS4-00041
NND07AA08B
NND08AA66C
NND11AG03C
NND11AQ73C
NNL09AB50T
NNL10AC38T
NNL06AA04B
NNL06AG30P
NNL07AA03A
NNL07AA44C
NNL07AA48C
NNL07AA54C
NNL08AA02B
NNL08AA16B
NNL10AA00B
NNL10AA05B
NAS2-01064
NND08AA04P
NNL10AA05B

ANNEX B

F33615-95-2-5562
F33615-96-2-5618
N00019-96-H-0118
F33615-97-2-3220
F33615-97-2-3400
F33615-97-2-3407
F33615-97-2-3805
F33615-97-2-5153
DAAH10-98-2-0003
F33615-98-2-5113
F33615-98-3-5103
F33615-98-3-5104
N00014-98-3-0022
DAAH10-99-2-0003
F29601-99-2-0149
F33615-99-2-5100
F33615-99-2-5501
N00014-99-3-0011
N00014-99-3-0012
N00014-99-3-0017
F33615-00-2-1717
F33615-00-2-3000
F33615-00-2-3002
F33615-00-2-5203
F33615-00-2-5208
F33615-00-2-5900
F49620-00-2-0384
MDA972-00-3-0007
N00014-00-3-0004
N00014-00-3-0019
N00421-00-3-0123
DAAH10-01-2-0005
F29601-01-2-0042
F29601-01-2-0045
F33615-01-2-3101
F33615-01-2-3110
F33615-01-2-3152
F33615-01-2-5204
F33615-01-2-5206
F33615-01-2-5213
N00421-01-3-0098
F04611-02-2-0003
F33615-02-2-3220
F33615-02-2-3251
F33615-02-2-6037
DAAH10-03-2-0002

F33615-03-2-1403
F33615-03-2-2306
F33615-03-2-3300
F33615-03-2-3304
F33615-03-2-5201
F33615-03-2-5202
F33615-03-2-6316
F33615-03-2-6318
MDA972-03-2-0003
FA8650-04-2-3449
FA8650-04-2-5000
W911NF-04-2-0039
FA8650-05-2-3503
FA9550-05-2-0001
W911W6-05-2-0006
FA8650-08-2-3834
N00173-08-2-C009
W991W6-08-2-0014
HR0011-10-2-0001
FA8650-11-2-1187
FA8650-11-2-2138