EUROPEAN COMMUNITIES AND CERTAIN MEMBER STATES – MEASURES AFFECTING TRADE IN LARGE CIVIL AIRCRAFT DECISION OF THE ARBITRATOR
Document: Addendum BCI deleted, as indicated [[***]]
Date: 2 October 2019
Document codes: WT/DS316/ARB/Add.1; WT/DS316/ARB.
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
DECISION OF THE ARBITRATOR
Addendum
BCI deleted, as indicated [[***]]

This addendum contains Annexes A to C to the Decision of the Arbitrator to be found in document

LIST OF ANNEXES
ANNEX A
WORKING PROCEDURES OF THE ARBITRATOR
Contents Page
Annex A-1 Working Procedures of the Arbitrator 4
Annex A-2 Additional Working Procedures for the Protection of Business Confidential
Information and Highly Sensitive Business Information
9
Annex A-3 Additional working Procedures for the Substantive Meeting with the Arbitrator 21
ANNEX B
ARGUMENTS OF THE PARTIES
Contents Page
Annex B-1 Integrated executive summary of the arguments of the United States 23
Annex B-2 Executive summary of the arguments of the European Union 32
ANNEX C
DECISION OF THE ARBITRATOR CONCERNING THE EUROPEAN UNION'S
PRELIMINARY RULING REQUEST
Contents Page
Annex C-1 Communication from the Arbitrator Preliminary Ruling (Conclusion) 49

ANNEX A
WORKING PROCEDURES OF THE ARBITRATOR
Contents Page
Annex A-1 Working Procedures of the Arbitrator 4
Annex A-2 Additional Working Procedures for the Protection of Business Confidential
Information and Highly Sensitive Business Information
9
Annex A-3 Additional working Procedures for the Substantive Meeting with the Arbitrator 21

ANNEX A-1
WORKING PROCEDURES OF THE ARBITRATOR

Adopted 17 August 2018

General

1. (1) In this proceeding, the Arbitrator shall follow the relevant provisions of the
Understanding on Rules and Procedures Governing the Settlement of Disputes ("DSU"). In
addition, the following Working Procedures apply.
(2) The Arbitrator reserves the right t o modify these procedures as necessary, after
consultation with the parties.
Confidentiality
2. (1) The deliberations of the Arbitrator and the documents submitted to it shall be kept
confidential. Members shall treat as confidential information that is submitted to the Arbitrator
by another Member which the submitting Member has designated as confidential.
(2) Nothing in the DSU or in these Working Procedures shall preclude a party from disclosing
statements of its own positions to the public.
(3) If a party submits a confidential version of its written submissions to the Arbitrator, it
shall also, upon request of a Member, provide a non-confidential summary of the information
contained in its submissions that could be disclosed to the public.
(4) Upon request, the Arbitrator may adopt appropriate additional procedures for the
treatment and handling of confidential information after consultation with the parties.
Submissions

3. (1) Before the substantive meeting of the Arbitrator with the parties, the United States shall
transmit to the Arbitrator and to the European Union a communication explaining the basis
for its request, including the methodology and data supporting it, in accordance with the
timetable adopted by the Arbitrator.
(2) Each party to the dispute shall also transmit to the Arbitrator a written submission in
which it presents the facts of the case and its arguments, in accordance with the timetable
adopted by the Arbitrator.
a. To facilitate the efficient conduct of this proceeding, the written submissions referenced in
the Arbitrator's timetable (United States' written communication explaining the basis for
its request (Methodology Paper), the European Union's written submission, and the United
States' written submission) shall not exceed 125 pages (single-spaced, font size 10) each.
This limit excludes exhibits accompanying written submissions.
b. The Arbitrator may grant an extension of this page limit upon a request from a party. A
party shall submit any such request in accordance with the procedures concerning service
of documents set out in paragraph 21 below and no later than seven days (one calendar
week) before the deadline to file the submission at issue. The request shall incl ude the
number of additional pages requested by the party for the submission at issue and explain
the circumstances that in its view warrant exceeding the page limit by the specified
number of pages. The Arbitrator shall rule on such requests promptly.
(3) The Arbitrator may invite the parties t o make additional submissions in the course of
the proceeding, including with respect to requests for preliminary rulings in accordance with
paragraph 4 below.

Preliminary rulings
4. (1) If either party considers that the Arbitrator should make a ruling prior to the issuance
of the Decision that certain issues are not properly before the Arbitrator , the following
procedure applies. Exceptions to this procedure shall be granted upon a showing of good
cause.
a. A party shall submit any such request for a preliminary ruling at the earliest possible
opportunity. The other party shall submit its response to the request at a time to be
determined by the Arbitrator in light of the request.
b. The Arbitrator may issue a preliminary ruling on the issues raised in such a preliminary
ruling request before, during or after the substantive meeting, or the Arbitrator may defer
a ruling on the issues raised by a preliminary ruling until it issues its Decision to the parties.
c. In the event that the Arbitrator finds it appropriate to issue a preliminary ruling prior to
the issuance of its Decision, the Arbitrator may provide reasons for the ruling at the time
that the ruling is made, or subsequently in its Decision.
(2) This procedure is without prejudice to the parties' right to request other types of
preliminary or procedural rulings in the course of the proceeding, and to the procedures that
the Arbitrator may follow with respect to such requests.
Evidence
5. (1) Each party shall submit all evidence to the Arbitrator no later than the substantive
meeting, except evidence necessary for purposes of rebuttal, or evidence necessary for
answers to questions or comments on answers provided by the other party. Additional
exceptions may be granted upon a showing of good cause.
(2) If any new evidence has been admitted upon a showing of good cause, the Arbitrator
shall accord the other party an appropriate period of time to comment on the new evidence
submitted.
6. (1) Where the original language of an exhibit or portion thereof is not a WTO working
language, the submitting party shall simultaneously submit a translation of the exhibit or
relevant portion into the WTO working language of the submission. The Arbitrator may grant
reasonable extensions of time for the translation of exhibits upon a showing of good cause.
(2) Any objection as to the accuracy of a translation should be raised promptly in writing,
preferably no later than the next filing or the meeting (whichever occurs earlier) following the
submission which contains the translation in question. Any objection shall be accompanied by
a detailed explanation of the grounds for the objection and an alternative translation.
7. (1) To facilitate the maintenance of the record of the dispute and maximize the clarity of
submissions, each party shall sequentially number its exhibits throughout the course of the
dispute, indicating the submitting Member and the number of each exhibit on its cover page.
Exhibits submitted by the United States should be numbered USA -1, USA-2, etc. Exhibits
submitted by the European Union should be numbered EU -1, EU-2, etc. If the last exhibit in
connection with a submission was numbered XXX-5, the first exhibit in connection with the
next submission thus would be numbered XXX-6.

(2) Each party shall provide an updated list of exhibits (in Word or Excel format) together
with each of its submissions, oral statements, and responses to questions.
(3) If a party submits a document that has already been submitted as an exhibit by the
other party, it should explain why it is submitting that document again.
(4) Insofar as a party cons iders that the Arbitrator should take into account a document
already submitte d as an exhibit in the prior panel proceeding s, it should resubmit that
document as an exhibit for the purpose of this proceeding. In its list of exhibits, it should refer

to the number of the original exhibit in t he original panel proceeding (OP) and Article 21.5
panel proceedings (CP), if applicable (for example: XXX-1 (XXX-21-OP), XXX-2 (XXX-11-CP)).
Editorial Guide
8. In order to facilitate the work of the Arbitrator, each party is invited to make its submissions
in accordance with the WTO Editorial Guide for Submissions (electronic copy provided).

Questions

9. The Arbitrator may pose questions to the parties at any time during the proceedings, including
by:
a. sending a list of written questions prior to the meeting, or a list of topics it intends to
pursue in questioning orally in the course of the meeting. The Arbitrator may ask different
or additional questions at the meeting; and
b. putting questions to the parties orally in the course of the meeting, and in writing following
the meeting, as provided for in paragraph 16 below.
Substantive meeting

10. The Arbitrator shall conduct its internal deliberations in closed session. The Arbitrator may,
upon request by either party, open its substantive meeting with the parties to the public subject to
appropriate procedures to be adopted by the Arbitrator after consulting with the parties.
11. The parties shall be present at the meetings only when invited by the Arbitrator to appear
before it.
12. (1) Each party has the right to determine the composition of its own delegation when
meeting with the Arbitrator.
(2) Each party shall have the responsibility for all members of its delegation and shall
ensure that each member of its delegation acts in accordance with the DSU and these Working
Procedures, particularly with regard to the confidentiality of the proceeding and the
submissions of the parties.
13. Each party shall provide to the Arbitrator and the other party the list of members of i ts
delegation no later than 5:00 p.m. (Geneva time) three working days pr ior to the first day of the
meeting with the Arbitrator.
14. A request for interpretation by any party should be made to the Arbitrator as early as possible,
preferably at the organizational stage, to allow sufficient time to ensure availability of interpreters.
15. There shall be one substantive meeting with the parties.
16. The substantive meeting of the Arbitrator with the parties shall be conducted as follows:
a. The Arbitrator shall invite the European Union to make an opening statement to present
its case first. Subsequently, the Arbitrator shall invite the United States to present its point
of view. Before each party takes the floor, it shall provide the Arbitrator and the othe r
party with a provisional written version of its statement. In the event that interpretation
is needed, each party shall provide additional copies for the interpreters.
b. After the conclusion of the opening statements, the Arbitrator shall give each party the
opportunity to make comments or ask the other party questions.
c. The Arbitrator may subsequently pose questions to the parties.
d. Once the questioning has concluded, the Arbitrator shall afford each party an opportunity
to present a brief closing statement, with the European Union presenting its statement

first. Before each party takes the floor, it shall provide the Arbitrator and the other party
at the meeting with a provisional written version of its closing statement, if available.
e. Following the meeting:
i. Each party shall submit a final written version of its opening statement no later than
5:00 p.m. (Geneva time) on the first working day following the meeting. At the same
time, each party should also submit a final written version of any prepared closing
statement that it delivered at the meeting.
ii. Each party shall send in writing, within the timeframe established by the Arbitrato r
prior to the end of the meeting, any questions to the other party to which it wishes to
receive a response in writing.
iii. The Arbitrator shall send in writing, within the timeframe established by the Arbitrator
prior to the end of the meeting , any question s to the parties to which it wishes to
receive a response in writing.
iv. Each party shall respond in writing to the questions from the Arbitrator, and to any
questions posed by the other party, within the timeframe established by the Arbitrator
prior to the end of the meeting.
Descriptive part and executive summaries

17. The description of the arguments of the parties in the Decision of the Arbitrator shall consist
of executive summaries provided by the parties, which shall be annexed as addenda to the Decision.
These executive summaries shall not in any way serve as a substitu te for the submissions of the
parties in the Arbitrator's examination of the case.
18. Each party shall submit one integrated executive summary, which shall summarize the facts
and arguments as presented to the Arbitrator in the party's submissions and statements, and where
possible, its responses to questions and comments thereon following the substantive meeting.
19. Each integrated executive summary shall be limited to no more than 15 pages.
20. The Arbitrator may request the parties to provide executive summaries of facts and arguments
presented in any other submissions to the Arbitrator for which a deadline may not be specified in
the timetable.
Service of documents

21. The following procedures regarding service of documents apply to all documents submitted by
parties in the course of the proceeding (including exhibits):
a. Each party shall submit all documents to the Arbitrator by submitting them with the
DS Registry (office No. 2047).
b. Each party shall submit one (1) paper copy of all documents it submits to the Arbitrator
by 5:00 p.m. (Geneva time) on the due dates established by the Arbitrator. The
DS Registrar shall stamp the documents with the date and time of submission. The paper
version submitted to the DS Registry shall constitute the official version for the purposes
of submission deadlines and the record of the dispute.
c. Each party shall also submit two CD -ROMs or two DVDs to the DS Registry, at the same
time that it submits the paper versions, each containing an electronic copy of all
documents that it submits to the Arbitrator , preferably in both Microsoft Word and PDF
format.
d. In addit ion, each party is invited to submit all documents through the Digital Dispute
Settlement Registry (DDSR) within 24 hours following the deadline for the submission of
the paper versions. If the parties have any questions or technical difficulties relating to

the DDSR, they are invited to consult the DDSR User Guide (electronic copy provided) or
contact the DS Registry at DSRegistry@wto.org.
e. Each party shall serve any document submitted to the Arbitrator directly on the other
party. A party may submit its documents to another party on a CD -ROM or DVD only,
unless the recipient party has previously requested a paper copy. Each party shall confirm,
in writing, that copies have been served on the parties, as appropriate, at the time it
provides each document to the Arbitrator.
f. Each party shall submit its documents with the DS Registry and serve copies on the other
party by 5:00 p.m. (Geneva time) on the due dates established by the Arbitrator.
g. All communications from the Arbitrator to the parties will be via email.
Correction of clerical errors in submissions
22. The Arbitrator may grant leave to a party to correct clerical errors in any of its submissions
(including paragraph numbering and typographical mistakes). Any such request should identify the
nature of the errors to be corrected, and should be made promptly following the filing of the
submission in question.

ANNEX A-2
ADDITIONAL WORKING PROCEDURES FOR THE PROTECTION OF BUSINESS CONFIDENTIAL
INFORMATION AND HIGHLY SENSITIVE BUSINESS INFORMATION

Adopted 27 September 2019
I. GENERAL
The following Procedures apply to all business confidential information ("BCI") and highly sensitive
business information ("HSBI") on the Arbitration record. These Procedures do not diminish the rights
and obligations of the Parties to request, disclose, or maintain the confidentiality of any information
within the scope of the SCM Agreement1 or the DSU.2

II. DEFINITIONS
For the purposes of these Procedures:

1. "Approved Persons" means Representatives or Outside Advisors of a Party, when
designated in accordance with these procedures.
2. "Arbitrator" means the DS316 Arbitrator under Article 22.6 of the DSU.
3. "Business Confidential Information" or " BCI" means any business information
regardless of whether contained in a document provided by a public or private body that a Party has
"Designated as BCI" because it is not otherwise available in the public domain and its disclosure
could, in the Party's view, cause harm to the originators of the information. Each Party shall act in
good faith and exercise restraint in designating information as BCI, and will endeavour to designate
information as BCI only if its disclosure would cause harm to the originators of the information.
4. "Conclusion of the Arbitration Process" means the earliest to occur of the following
events:
(a) the date of circulation of the decision of the Arbitrator; or
(b) pursuant to Article 3.6 of the DSU, a mutually satisfactory solution is notified to
the DSB.
5. "Designated as BCI" means:
(a) for printed information, text that is set off with bolded square brackets in a
document clearly marked with the notation "BUSINESS CONFIDENTIAL
INFORMATION" and with the name of the Party that submitted the information;
(b) for electronic information, characters that are set off with bolded square
brackets (or with a heading with bolded square brackets on each page) in an
electronic file that contains the notation "BUSINESS CONFIDENTIAL
INFORMATION", has a file name that contains the letters "BCI", and is stored
on a storage medium with a label marked "BUSINESS CONFIDENTIAL
INFORMATION" and indicating the name of the Party that submitted the
information; and

1 Agreement on Subsidies and Countervailing Measures ("SCM Agreement").
2 Understanding on Rules and Procedures Governing the Settlement of Disputes ("DSU").

(c) for uttered information, declared by the speaker to be "Business Confidential
Information" prior to utterance.3
(d) In case either Party objects to the designation of information as BCI under
paragraphs 5(a)-(c), the dispute shall be resolved by the Arbitrator. If the
Arbitrator disagrees with designation of information as BCI, the submitting Party
may either designate it as non-BCI or withdraw the information. In the case of
withdrawal, the Arbitrator shall either destroy such information or return it to
the submitting Party. Each Pa rty may at any time designate as non -BCI
information previously designated by that Party as BCI.
This paragraph shall apply to all submissions, including exhibits, by a Party.

6. "Designated as HSBI" means:
(a) for printed information, text that is set off with double bolded square brackets
in a document clearly marked with the notation "HIGHLY SENSITIVE BUSINESS
INFORMATION" and with the name of the Party that submitted the information;
(b) for electronic informatio n, in characters that are set off with double bolded
square brackets (or a heading with double bolded square brackets on each
page) in an electronic file that contains the notation "HIGHLY SENSITIVE
BUSINESS INFORMATION", has a file name that contains the letters "HSBI",
and is stored on a storage medium with a label marked "HIGHLY SENSITIVE
BUSINESS INFORMATION" and indicating the name of the Party that submitted
the information; and
(c) for uttered information, declared by the speaker to be "Highly Sensitive
Business Information" prior to utterance.4
This paragraph shall apply to all submissions, including exhibits, by a Party.

7. "Electronic information" means any information stored in an electronic form (including
but not limited to binary-encoded information).
8. "Highly Sensitive Business Information" or "HSBI" means any business information
regardless of whether contained in a document provided by a public or private body that a Party has
"Designated as HSBI" because it is not otherwise available in the publi c domain and its disclosure
could, in the Party's view, cause exceptional harm to its originators. Each Party shall act in good
faith and exercise the utmost restraint in designating information as HSBI. Each Party may at any
time designate as non-BCI/HSBI or as BCI information previously designated by that Party as HSBI.
(a) The following categories of information may be Designated as HSBI:
(i) information indicating the actual selling or offered price of any large civil
aircraft (LCA) manufacturer's products or services5, and, except as provided
in subparagraph 8 (d)(i) below, any graphs or other use of the data which
reflect the movement of prices , pricing trends or actual prices of an LCA
model or a family of LCA;

3 The erroneous failure by a speaker to make such a prior declaration shall not affect the designation of
the BCI in question.
4 The erroneous failure by a speaker to make such a prior declaration shall not affect the designation of
the HSBI in question.
5 This category includes (but is not limited to) information on individual LCA prices, prices per seat, or
information allowing the operating cost per seat of an LCA to be determined, calculated or reflected; the
negotiated or offered prices for the airframe; all concessions offered or agreed to by an LCA manufacturer
including financing, spare parts, maintenance, pilot training, asset value and other guarantees, buy back
options, remarketing arrangements or other forms of credit support. This category shall also include the actual
pricing information relating to any number of individual LCA offers and prices (including concessions)
aggregated by model or other category.

(ii) information gathered or produced in the context of LCA sales campaigns;
(iii) information concerning market forecasts, analyses, business plans and
share/business valuations generated by LCA producers, consultants, or
investment banks or the European Investment Bank, with regard to LCA
products; or
(iv) information concerning an LCA manufacturer's costs of production, including
but not limited to data regarding pricing by suppliers.
(b) Each Party may also Designate as HSBI other categories of business information
that are not otherwise available in the public domain and the disclosure of which
could, in the Party's view, cause exceptional harm to its originators.
(c) Each Party shall Designate as HSBI any information described in subparagraph
8(a) that pertains to LCA produced by an LCA manufacturer headquartered
within the territorial jurisdiction of either of the Parties.
(d) The following categories of information may not be Designated as HSBI:
(i) aggregated pricing data for a particular LCA model or family of LCA within a
particular market that is indexed (i.e., does not reflect actual prices but
rather movements in prices off a base of 100 for a particular year). Such
data shall be treated as BCI;
(ii) general legal conclusions based on HSBI (e.g., that HSBI demonstrates that
a producer engaged in price undercutting). Such conclusions shall be
treated as neither BCI nor HSBI;
(iii) contracts on the granting of launch aid or reimbursable launch investment
and project appraisal documents relating thereto, other than information
described in subparagraph 8(a);
(iv) the terms and conditions of loans, other than information described in
subparagraph 8(a); and
(v) intergovernmental agreements and government decisions, other than
information described in subparagraph 8(a).
(e) Information may not be Designated as HSBI simply because it is subject to bank
secrecy or banker-client confidentiality.
(f) In case either Party objects to the designation of information as HSBI under
paragraphs 8(a)-(e), the dispute shall be resolved by the Arbitrator. I f the
Arbitrator disagrees with designation of information as HSBI, the submitting
Party may either designate it as BCI, as non -BCI/HSBI or withdraw the
information. In the case of withdrawal, the Arbitrator shall either destroy such
information or return it to the submitting Party. Each Party may at any time
designate as non-BCI/HSBI or as BCI information previously designated by that
Party as HSBI.
9. "HSBI Approved Persons" means Approved Persons specifically designated by the Parties
as having the right to access HSBI (according to the procedures laid down in Section IV).
10. "HSBI location" means a room to be kept locked when not occupied and the access to
which shall be possible only for HSBI Approved Persons, located:
(a) for HSBI submitted by the United States, on the premises of (i) the United
States Mission to the European Union in Brussels and (ii) the Office of the United
States Trade Representative in Washington, DC;

(b) for HSBI submitted by the European Union, on the premises of the Delegation
of the European Union to the United States in Washington, DC and (ii) the
Directorate General for Trade of the European Commission in Brussels.
11. "Locked CD" means a CD-ROM that is not rewritable.
12. "Outside Advisor" means a legal counsel or other advisor of a Party, who:
(a) advises a Party in the course of the dispute;
(b) is not an employe e, officer or agent of an entity or an affiliate of an entity
engaged in the manufacture of LCA, the provision of supplies to an entity
engaged in the manufacture of LCA, or the supply of air transportation services;
and
(c) is subject to an enforceable code o f professional conduct that includes an
obligation to protect confidential information, or has been retained by another
outside advisor who assumes responsibility for compliance with these
procedures and is subject to such a code of professional conduct.
For purposes of this paragraph, outside legal counsel representing an LCA producer
headquartered in the territory of one of the Parties in connection with these proceedings or
outside consultants who have been retained by such counsel to provide advice wit h regard
to these proceedings are not considered agents of an entity listed in subparagraph (b).

13. "Party" means the European Union or the United States.
14. "Party-BCI" means BCI originally submitted by a Party.
15. "Representative" means an employee of a Party.
16. "Sealed laptop computer" means a laptop computer having (software and hardware)
characteristics considered necessary by the submitting Party for pr otection of that HSBI, provided
that it has software installed that permits such HSBI to be searched and printed in accordance with
the provisions of Section VI. However, HSBI may not be edited on the sealed laptop computer.
17. "Secure site" means a facility to be kept locked when not occupied and the access to which
shall be possible only for Approved Persons, located:
(a) in the case of the European Union, the offices of WTO Team of the Legal Service
of the European Commission (Rue de la Loi 200, Brussels, Belgium), the offices
of Directorate General for Trade of the European Commission (Rue de la Loi
170, Brussels, Belgium), the offices of the Permanent Mission of the European
Union to the International Organisations in Geneva (Rue du Grand-Pré 66, 1202
Geneva, Switzerland), and three additional sites specified in accordance with
subparagraph (c);
(b) in the case of the United States, the offices of the Office of the United States
Trade Representative (600 17th Street, NW, and 1724 F Street NW,
Washington, DC, USA), the Mission of the United States to the World Trade
Organization (11, route de Pregny, 1292 Chambésy, Switzerland), and three
additional sites specified in accordance with subparagraph (c); and
(c) three sites other than a government office that are designated by each Party
for use by its Outside Advisors; provided that the identity of those sites has
been submitted to the other Party and the Arbitrator, and the other Party has
not objected to the designation of that site within ten days of such submission.
(d) Any objections raised under subparagraph (c) may be resolved by the
Arbitrator.

18. "Stand-alone computer" means a computer that is not connected to a network.
19. "Stand-alone printer" means a printer that is not connected to a network.
20. "Submission" means any written, electronic, or uttered information transmitted to the
Arbitrator, including but not limited to, correspondence, written submissions, exhibits, oral
statements, and answers to questions.
21. "WTO Approved Persons" means the members of the Arbitrator and persons employed
or appointed by the Secretariat who have been authorized by the Secretariat to work on the dispute
(and includes translators and interpreters as well as any transcribers present at Arbitrator meetings
involving BCI and/or HSBI).
22. "WTO Rules of Conduct" means the Rules of Conduct for the Understanding on Rules and
Procedures Governing the Settlement of Disputes, as adopted by the DSB on 3 December 1996
(WT/DSB/RC/1).
III. SCOPE
23. These procedures apply to all BCI and HSBI received by an Approved Person and by W TO
Approved Persons as a result of the Arbitration.
24. Unless specifically otherwise provided herein, these procedures do not apply to a Party's
treatment of its own BCI and HSBI.
25. The Arbitrator is aware that the European Union may need to submit informatio n that it
internally classifies as "EU Top Secret", "EU Secret" or "EU Confidential". The Arbitrator will to the
extent possible implement procedures for the protection of such classified information in the event
that either Party informs the Secretariat that it will be submitting such classified information and
has not already designated it as BCI or HSBI. In such cases, the submitting Party shall propose
appropriate procedures for the protection of such classified information.
IV. DESIGNATION OF APPROVED PERSONS
26. At the latest by 12:00 p.m. (noon) on 3 September 2018, each Party shall submit to the
other Party, and to the Arbitrator, a list of the names and titles of any Representatives and Outside
Advisors who need access to BCI submitted by the other Party and whom it wishes to have
designated as Approved Persons, along with any clerical or support staff that would have access to
the BCI. On that list, each Party shall indicate which Approved Persons need access to HSBI
submitted by the other Party and whom it wishes to have designated as HSBI Approved Persons.
Each Party may designate new Approved Persons, remove, or replace Approved Persons by
submitting amendments to its list of Approved Persons to the other Party and to the Arbitrator.
27. Each Party shall keep the number of Approved Persons as limited as possible. Each Party
may designate no more than a total of 30 Representatives and 20 Outside Advisors as "HSBI
Approved Persons".
28. WTO Approved Persons shall have access to BCI. The Director -General of the WTO, or his
or her designee, shall submit to the Parties, and to the Arbitrator, a list of the WTO Approved Persons
and shall identify which of those WTO Approved Persons shall additionally have access to HSBI.
29. Unless a Party objects to the designation of an Outside Advisor of the other Party, the
Arbitrator shall designate those persons as Approved Persons. A Party also may object within ten
days of becoming aware of information that was not available to the Party at the time of the filing
of a list under paragraph 26 that would suggest that designation of an individual is not appropriate.
If a Party objects, the Arbitrator shall decide on the objection within ten working days.
30. An objection may be based on the failure to satisfy the definition of "Outside Advisor" or on
any other compelling basis, including conflicts of interest.

31. The Parties or the Director -General of the WTO, or his or her designee, may submit
amendments to their lists at any time, subject to the overall limits set out in paragraph 27 and to
objections for the addition of new Approved Persons in accordance with paragraphs 29 and 30. Any
such amendments or objections by a Party shall be submitted to the Arbitrator and communicated
to the other Party on the same day. Any amendments to the list of WTO Approved Persons shall be
promptly communicated to the Parties.
V. BCI
32. Only Approved Persons and WTO Approved Persons may have access to BCI submitted in
this proceeding. Approved Persons and WTO Approved Persons shall use BCI only for the purposes
of this dispute. No Approved Person or WTO Approved Person shall disclose BCI, or allow it to be
disclosed, to any person except another Approved Person or WTO Approved Person. These
obligations apply indefinitely.
33. A Party shall make no more than one copy of any BCI submitted by the other Party for each
Secure site provided for that Party in paragraph 17.
34. Parties may incorporate BCI in inter nal memoranda for the exclusive use of Approved
Persons. Any memorandum and the BCI it contains shall be marked in accordance with paragraph 5.
35. BCI submitted pursuant to these procedures shall not be copied, distributed, or removed
from the Secure site, except as necessary for submission to the Arbitrator.
36. The treatment in a Party's submissions to the Arbitrator of any BCI shall be governed by the
provisions of this paragraph, which shall prevail to the extent of any conflict with the other provisions
of the Working Procedures (including these Procedures) relating to BCI.
(a) Parties may incorporate BCI in submissions to the Arbitrator, marked as
indicated in paragraph 5. In exceptional cases, parties may include BCI in an
appendix to a submission.
(b) A Party submitting a submission or appendix containing BCI shall also submit,
within a time period to be set by the Arbitrator, a version redacting any BCI.
This shall be ref erred to as the "Non -BCI Version". However, a Party is not
required to submit a "Non -BCI Version" of any exhibit containing BCI, unless
specifically directed to do so by the Arbitrator;
(c) A Non-BCI Version shall be sufficient to permit a reasonable underst anding of
its substance. In order to prepare such a Non-BCI Version:
(i) A Party may request the Party that originally submitted the BCI, as soon as
possible, to indicate with precision portions of documents containing BCI
that may be included in the non -BCI Version and, if necessary to permit a
reasonable understanding of the substance of the information, produce a
Non-BCI summary in sufficient detail to achieve this aim.
(ii) Upon receipt of such a request, the Party that originally submitted the BCI
shall, as so on as possible, indicate with precision portions of documents
containing BCI that may be included in the Non-BCI Version and, if necessary
to permit a reasonable understanding of the substance of the information,
produce a Non-BCI summary in sufficient detail to achieve this aim.
(iii) The Arbitrator shall resolve any disagreement as to whether the Party that
originally submitted the BCI failed to indicate with sufficient precision
portions of documents containing BCI that may be included in the Non -BCI
Version and to produce, if necessary, a Non-BCI summary in sufficient detail
to permit a reasonable understanding of the substance of the information,
and may take appropriate action to ensure that the provisions of this
paragraph are satisfied.

(d) The European Union may designate the personal offices of up to four of its
Approved Persons as additional Secure sites for the sole purpose of storing and
permitting review of the BCI versions of the Parties' submissions to the
Arbitrator. All of the protections applicable to BCI under these procedures,
including the storage rules in paragraph 39, shall apply to such submissions.
BCI exhibits to submissions may not be stored or reviewed at these additional
Secure sites. The EU shall submit the address (including room number) of each
of the additional Secure sites to the Arbitrator and the complaining Party.
37. Any document containing BCI shall not be copied in excess of the number of copies required
by the Approved Persons. The making of electronic copies shall be avoided whenever possible. Such
documents may be transmitted electronically only by using secure e-mail, or by means of encrypted
electronic communication. If a Party submits to the Arbitrator an original document that cannot be
transmitted electronically, it shall on the day of submission deliver a copy of that document to one
of the Secure sites listed in paragraph 17. The Parties shall designate one of the Secure sites listed
in paragraph 17 for this purpose.
38. A Party that wishes to submit or refer to BCI at an Arbitration meeting shall so inform the
Arbitrator and the other Party. The Arbitrator shall exclude persons who are not Approved Persons
or WTO Approved Persons from the meeting for the duration of the submission and discussion of
BCI.
39. Approved Persons and WTO Approved Persons shall store BCI only in locked security
containers or in computers or computer systems that prevent access to such documents by non -
approved persons. In the case of BCI submitted to the Arbitrator, such locked security containers
shall be kept on the WTO Secre tariat's premises, except that members of the Arbitrator may
maintain a copy of all relevant documents and materials containing BCI at their places of residence.
Such documents and materials shall be stored in locked security containers when not in use. BCI
shall be appropriately protected against improper inspection and eavesdropping when being
consulted and will be transmitted in sealed heavy duty double envelopes only. All work papers (e.g.,
draft submissions, worksheets, etc.) containing BCI shall, w hen no longer needed, be shredded or
burned consistent with normal government practice for destroying sensitive documents.
40. The Arbitrator shall not disclose BCI in its decision, but may make statements or draw
conclusions that are based on the information drawn from the BCI. Before the Arbitrator makes its
decision publicly available, the Arbitrator shall give each party an opportunity to ensure that the
decision does not contain any information that it has designated as BCI.
VI. HSBI
41. Unless otherwise provide d below, HSBI shall be subject to all the restrictions in Section V
applicable to BCI.
42. HSBI shall be submitted to the Arbitrator in electronic form, using Locked CDs or two Sealed
laptop computers connectable to 19" - 21" monitors, or in hard copy form, f or access by WTO
Approved Persons designated pursuant to paragraph 28 as being additionally authorized to access
HSBI. All such HSBI shall be stor ed in a combination safe in a designated secure location on the
premises of the WTO Secretariat. Any computer in that room shall be a Stand -alone computer. A
Stand-alone printer may be used to make hard copies of any HSBI. Such hard copies shall be made
on distinctively colored paper and marked in accordance with paragraph 6. Such hard copies shall
either be stored in a combination safe at the designated secure location referred to above, or
destroyed at the end of the relevant working session. HSBI shall not be removed from this designated
secure location, except in the form of handwritten notes that may be used only for working sessions
on the WTO Secretariat's premises by WTO Approved Persons designated pursuant to paragraph 28
as being additionally authorized to access HSBI and which shall be destroyed once no longer in use.
Also, documents containing HSBI may be removed if stored on a Sealed laptop computer provided
by the Party that submitted the information , if stored on Locked CDs provided by the Party that
submitted the information, or if stored on a Stand -alone computer on which HSBI has been saved
pursuant to paragraph 47, to the extent necessary for working sessions of the Arbitrator and WTO
Approved Persons designated pursuant to paragraph 28 as being additionally authorized to access
HSBI, subject to the following conditions:

(a) the Sealed laptop computer , Locked CDs, or Stand -alone computer on which
HSBI has been saved pursuant to paragraph 47 shall remain on the premises of
the WTO at all times;
(b) the Sealed laptop computer , Locked CDs, or Stand -alone computer on which
HSBI has been saved pursuant to paragraph 47 shall at all times be in the
exclusive and direct custody of a WTO Approved Person designated pursuant to
paragraph 28 as being additionally authorized to access HSBI;
(c) the WTO Approved Person in exclusive and direct custody of the Sealed laptop
computer, Locked CDs, or Stand-alone computer on which HSBI has been saved
pursuant to paragraph 47 shall ensure that no reproductions of any kind of
information stored on the Sealed laptop , the L ocked CDs , or Stand -alone
computer on which HSBI has been saved pursuant to paragraph 47 are created
in any way;
(d) information contained on the Locked CDs shall only be viewed or processed
using a Stand -alone computer that is neither connected to a network nor
capable of being connected to a network. When not in u se, such Stand-alone
computers shall be kept in locked security containers on the premises of the
WTO Secretariat; and
(e) at the conclusion of the relevant working session, the Sealed laptop computer,
Locked CDs, or Stand-alone computer on which HSBI has been saved pursuant
to paragraph 47 shall be immediately returned to the combination safe in the
designated secure location referenced above.
Any working sessions involving HSBI that occur outside of the d esignated secure location referred
to above shall only occur in the personal work spaces (on the premises of the WTO Secretariat) of
WTO Approved Persons designated pursuant to paragraph 28 as being addi tionally authorized to
access HSBI, or, for internal meetings of the Arbitrator and/or of WTO Approved Persons designated
pursuant to paragraph 28 as being additionally authorized to access HSBI , only in closed meeting
rooms on the premises of the WTO Secretariat. During all such working sessions, and with respect
to all spaces in which such working sessions occur, special care shall always be taken to ensure the
security of HSBI.
43. Each Party shall maintain an additional copy (electronic or hard) of the HSBI it submits to
the WTO, for access by HSBI Approved Persons acting on behalf of the other Party, in the HSBI
locations listed in paragraph 10. A Stand -alone printer may be used to make hard copies of any
HSBI. Such hard copies shall be made on distinctively colored paper. Such hard copies shall either
be stored in a safe at the relevant HSBI location, or destroyed at the end of the relevant working
session.
44. Except as otherwise provided in these procedures, HSBI shall not be stored, transmitted or
copied either in written or electronic form.
45. HSBI Approved Persons may view HSBI on the Sealed laptop computer maintained by the
other Party or, in the case of HSBI submitted on Locked CDs on a Stand-alone computer, only in a
designated room at one of the HSBI locations indicated in paragraph 10 or at the designated secure
location on the premises of the WTO Secretariat referred to in paragraph 42, unless otherwise
mutually agreed by the Parties. The designated rooms shall be available to HSBI Approved Persons
from 9:00 a.m. to 5:00 p.m. (local time) during official working days at the respective HSBI location.
The designated secure location referred to in paragraph 42 shall be availabl e to HSBI Approved
Persons by prior arrangement with the WTO Secretariat. HSBI Approved Persons may not bring into
such room any electronic recording or transmitting devices. HSBI Approved Persons may not remove
HSBI from such room, except in the form of handwritten notes or aggregated information generated
on a Stand-alone computer. In either case, such notes or information shall be used exclusively for
this dispute in connection with which the HSBI has been submitted. Each person viewing the HSBI
in the HSBI location or designated secure location referred to in paragraph 42 shall complete and
sign a log identifying the HSBI that the person reviewed or, alternatively, such a log can be generated
automatically. Each Party shall, for the HSBI location wi thin its territory referenced in paragraph

10, maintain such log until one year after the Conclusion of the Arbitration Process . The WTO
Secretariat shall, for the designated secure location referred to in paragraph 42, maintain such log
until one year after the Conclusion of the Arbitration Process. Before entering and when leaving
such room, Outside Advisors who are HSBI Approved Persons may be subject to appropriate controls.
46. No HSBI Approved Person or WTO Approved Person designated pursuant to paragraph 28
as being additionally authorized to access HSBI shall disclose HSBI to any person except another
HSBI Approved Person or WTO Approved Person designated pursuant to paragraph 28 as being
additionally authorized to access HSBI, and then only for the purpose of this dispute. This obligation
applies indefinitely.
47. HSBI may be processed only on Stand-alone computers. WTO Approved Persons designated
pursuant to paragraph 28 as being additionally authorized to access HSBI may create electronic files
containing HSBI and may save such files on a Stand -alone computer that is neither connected to a
network nor capable of being connected to a network . Any electronic file containing HSBI shall not
be transmitted electronically, whether by e-mail, facsimile, or otherwise.
48. A Party that wishes to submit or refer to HSBI at an Arbitration meeting shall so inform the
Arbitrator and the other Party. The Arbitrator shall exclu de persons who are not HSBI Approved
Persons or WTO Approved Persons designated pursuant to paragraph 28 as being additionally
authorized to access HSBI from the meeting for the duration of the submission and discussion of
HSBI.
49. All HSBI shall be stored in a safe at the relevant HSBI location or in accordance with
paragraph 42.
50. The treatment in a Party's submissions to the Arbitrator of any HSBI shall be governed by
the provisions of this paragraph, which shall prevail to the extent of any conflict with the other
provisions of the Working Procedures (including these Procedures) relating to HSBI.
(a) HSBI may be incorporated into a separate appendix to, bu t not the body of, a
Party's submission, which appendix shall be comprehensible in itself. The
document containing the HSBI shall be referred to as the "Full HSBI Version
Appendix";
(b) A Party submitting an appendix containing HSBI shall also submit, within a time
period to be set by the Arbitrator, a version redacting any HSBI. This shall be
referred to as the "Redacted Version Appendix";
(c) At the request of a Party, information contained in the Redacted Version
Appendix may be treated as BCI, in accordance with the provisions of Section V;
(d) A Redacted Version Appendix shall be sufficient to permit a reasonable
understanding of its substance. In order to prepare such a Redacted Version
Appendix:
(i) A Party may request that the Party that originally submitted the HSBI, as
soon as possible, indicate with precision portions of documents containing
HSBI that may be included in the Redacted Version Appendix an d, if
necessary to permit a reasonable understanding of the substance of the
information, produce a non -HSBI summary in sufficient detail to achieve
this aim.
(ii) Upon receipt of such a request, the Party that originally submitted the HSBI
shall, as soon as possible, indicate with precision portions of documents
containing HSBI that may be included in the Redacted Version Appendix and,
if necessary to permit a reasonable understanding of the substance of the
information, produce a non -HSBI summary in sufficie nt detail to achieve
this aim.

(iii) The Arbitrator shall resolve any disagreement as to whether the Party that
originally submitted the HSBI failed to indicate with sufficient precision
portions of documents containing HSBI that may be included in the Redacted
Version Appendix and to produce, if necessary, a non -HSBI summary in
sufficient detail to permit a reasonable understanding of the substance of
the information, and may take appropriate action to ensure that the
provisions of this paragraph are satisfied.
(e) The Full HSBI Version Appendix shall be kept in an HSBI location and in the
designated secure location referred to in paragraph 42, as appropriate, in the
form of a Locked CD. If it is not practical to keep the Full HSBI Version Appendix
in an HSBI locati on, the Party may keep it in a locked security container in a
Secure site in the form of a Locked CD.
(f) The Locked CD containing the Full HSBI Version Appendix shall bear the label
marked "FULL VERSION OF HSBI APPENDIX TO SUBMISSION" and indicate the
name of the Party that submitted the HSBI. In addition, the HSBI Appendix
itself shall be marked with a heading with double bolded square brackets on
each page in an electronic file that contains the notation "FULL VERSION OF
HSBI APPENDIX TO SUBMISSION". The electronic file containing the HSBI
Appendix shall have a file name that contains the letters "HSBI".
(g) The Party shall submit one copy of the Full HSBI Version Appendix to the
Arbitrator (through a WTO Approved Person identified by the Arbitrator ) and
two copies to the other Party in the form of two L ocked CDs. The Full HSBI
Version Appendix shall not be transmitted via e -mail. Parties shall agree
between themselves beforehand on the name of the Approved Person that is to
receive the Locked CDs.
(h) The Party shall commence transfer of the Locked CDs containing the Full HSBI
Version Appendix no later than the deadline for the submission concerned, and,
at the same time, provide the Arbitrator and the other Party with proof that this
has been done.
(i) No more than one working day in advance of a n Arbitration meeting with the
parties, a Party may, exclusively at that Party's Perman ent Mission in Geneva,
use the L ocked CD to produce no more than one hard copy of the Full HSBI
Version Appendix for each HSBI Approve d Person planning to attend that
Arbitration meeting. All paper versions produced pursuant to this subparagraph
shall be collected by the Party concerned and destroyed immediately after the
conclusion of the meeting.
(j) WTO Approved Persons designated pursuan t to paragraph 28 as being
additionally authorized to access HSBI may, exclusively on the WTO premises,
produce paper versions of the Full HSBI Ver sion Appendix for the purpose of,
and immediately prior to, a n Arbitration meeting with the parties and/or an
internal meeting. When not in use, these paper versions shall be stored in a
locked container in the designated secure location referred to in paragraph 42.
All paper versions produced pursuant to this subparagraph shall be destroyed
after the Conclusion of the Arbitration Process as defined in paragraph 4.
(k) Parties are encouraged to submit versions of exhibits containing HSBI from
which all HSBI has been deleted. Such exhibits shall be referred to as "HSBI -
Redacted Version Exhibits". HSBI-Redacted Version Exhibits may contain BCI.
(i) A Party may submit HSBI-Redacted Version Exhibits prepared by that Party
to the Arbitrator, and serve them on the other Party in accordance with the
applicable procedures, at the time it serves th e submission to which the
exhibit relates.

(ii) If a HSBI-Redacted Version Exhibit is not submitted by the Party submitting
the exhibit, an HSBI -Approved Person representing the other Party may
prepare an HSBI-Redacted Version Exhibit of any such exhibit.
(iii) HSBI-Redacted Version Exhibits may be prepared by an HSBI -Approved
person, at an HSBI location, by deleting the HSBI in the exhibit (identified
by double brackets) from such exhibit and either printing or photo -copying
the resulting document containing no HSBI. The deletion of HSBI from the
resulting document shall be verified by a person authorized for this purpose
by the Party that submitted the exhibit(s) in question. The resulting
document containing no HSBI (but which may contain BCI) will constitute
the HSBI-Redacted Version Exhibit of such exhibit, and may be removed
from the HSBI location.
(iv) The Parties shall cooperate to the maximum extent possible to make
available necessary facilities, including printers, photo-copiers, and physical
means for the deletion of text from a document, to enable the preparation
of HSBI -Redacted Version Exhibits, including making available an
HSBI-Approved Person for purposes of the verification provided for in
paragraph (iii) above. HSBI-Redacted Version Exhibits may be prepared by
HSBI-Approved Persons upon request during the times the designated room
at the relevant HSBI location is available.
(v) The Arbitrator shall resolve any disagreement arising from the operation of
this sub -paragraph, and may take appropriate acti on to ensure that the
provisions of this paragraph are satisfied.
(l) The Arbitrator reserves the right, after consulting the parties, to amend the
provisions of this paragraph at any time in order to accommodate situations
arising during Arbitration meetings, and the preparation of the decision.
51. The Arbitrator shall not disclose HSBI in its decision, but may make statements or draw
conclusions that are based on the information drawn from the HSBI. Before the Arbitrator makes its
decision publicly available, t he Arbitrator shall give each party an opportunity to ensure that the
decision does not contain any information that it has designated as HSBI.
VII. RESPONSIBILITY FOR COMPLIANCE
52. Each Party is responsible for ensuring that its Approved Persons comply with thes e
procedures to protect BCI and HSBI submitted by each Party, as well as with enforceable codes of
professional conduct to which its Approved Persons or other Outside Advisors are subject. WTO
Approved Persons shall comply with these procedures to protect BCI and HSBI submitted by a Party.
WTO Approved Persons are covered by the WTO Rules of Conduct. As provided for in the WTO Rules
of Conduct, evidence of breach of these Rules may be submitted to the Chair of the DSB or to the
Director-General of the WTO, or his or her designee, as appropriate, for appropriate action pursuant
to Section VIII of the WTO Rules of Conduct.
VIII. ADDITIONAL PROCEDURES
53. After consulting with the Parties, the Arbitrator may apply any other additional procedures
that it considers necessary to provide additional protections to the confidentiality of BCI or HSBI or
other types of information not explicitly covered by these Procedures.
54. The Arbitrator may, with the consent of both Parties, waive any part of these procedures.
Such "waiver" shall be specifically set forth in writing and signed by a representative of both Parties.
IX. RETURN AND DESTRUCTION
55. Except as provided for in paragraph 56 immediately below, after the Conclusion of the
Arbitration Process as defined in paragraph 4, within a period to be fixed by the Arbitrator, WTO
Approved Persons and the Parties (along with all Approved Persons) shall destroy or return all

documents (including electronic material) or other recordings containing BCI to the Party that
submitted such documents or other recordings. At the same time, WTO Approved Persons and the
Parties shall destroy or return any electronic material containing HSBI, together with any typed or
manuscript record thereof.
56. The WTO Secretariat shall retain one hard copy and one electronic version of the Decision
of the Arbitrator containing BCI, and one electronic version of all documents containing BCI (except
documents destroyed or returned pursuant to paragraph 55 immediately above because such
documents contained HSBI) that were submitted to the Arbitrator. The Decision and the documents
containing BCI referred to in the preceding sentence shall be recorded on locked CD(s), to be kept
in sealed containers in a locked cabinet on the premises of the WTO Secretariat.
57. The hard drive of each Stand-alone computer that has been used to store HSBI at any time
and all media used to back up such computers shall be destroyed within the period fixed by the
Arbitrator pursuant to paragraph 55.

ANNEX A-3
ADDITIONAL WORKING PROCEDURES FOR THE SUBSTANTIVE MEETING WITH THE ARBITRATOR
Adopted 6 December 2018
1. During the meeting with the parties, the following persons will be admitted into the meeting
room: (a) the Arbitrator; and (b) all Approved Persons, HSBI Approved Persons, and WTO Approved
Persons. The Arbitrator will invite the European Union to first present its full opening oral statement
before the floor is given to the United States to present its full opening oral statement. The opening
oral statements will be videotaped and be made available for later viewing, as set out in paragraph
5 below.
2. BCI or HSBI in the texts of the opening oral statements provided to the Arbitrator and the
other party during the meeting and prior to the delivery of the opening oral statements shall be
bracketed in accordance with the BCI/HSBI Procedures. In addition, a party including HSBI in its
opening oral statement shall provide, prior to delivery of the opening oral statement, one paper copy
to each member of the Arbitrator and one paper copy to the other party, on coloured paper, with
the HSBI included in double brackets. This document shall be subject to the same confidentiality
rules as an HSBI Appendix to a written submission.
3. Paragraphs 38 and 48 of the BCI/ HSBI Procedures shall be observed at all times during the
meeting. Further in that context, if at any point during its opening oral statement a party intends to
utter BCI or HSBI, it shall request that the videotaping be discontinued for the relevant portion of
the opening oral statement, after which videotaping will be resumed. The party that requests the
discontinuation of the videotaping shall also indicate when the BCI or HSBI por tion has ended so
that the videotaping can be resumed. A party is invited to first deliver a part of its opening oral
statement that contains no BCI or HSBI, and then ask for the videotaping to be discontinued, before
delivering a second part of its opening oral statement containing BCI or HSBI.
4. After both opening oral statements have been delivered, the Arbitrator will ask the parties
whether they can confirm that no BCI or HSBI was pronounced during the videotaped portion s of
the opening oral statements. If each party so confirms, the showing of the videotape will proceed
according to schedule. If either party, within a deadline to be established by the Arbitrator, requests
to review the videotape after the meeting , both parties will be invited to atten d that review,
accompanied by one or more representatives of the Secretariat responsible for editing, on the
premises of the WTO at an appropriate time after the meeting. The parties should be prepared to
advise the WTO Secretariat representative(s) which portion of the opening oral statement presents
a concern, and limit review to those portions of the videotape to the maximum extent possible. If
either party considers that a specific portion of the videotape must be deleted — because it is BCI
or HSBI — the specific portion of the videotape will be deleted.
5. The showing of the videotape of the opening oral statements of the parties shall take place on
a date to be established by the Arbitrator after consulting the parties . It will be open to officials of
WTO Members and Observers, and, upon registration with the Secretariat, to accredited journalists,
accredited representatives of non -governmental organizations, and other interested persons,
including members of the public. The WTO Secretariat will place a notice on the WTO website no
later than four weeks before the date of the public viewing to inform the public of the showing. The
notice shall include a link through which persons can register with the WTO Secretariat to attend the
showing.

ANNEX B
ARGUMENTS OF THE PARTIES
Contents Page
Annex B-1 Integrated executive summary of the arguments of the United States 23
Annex B-2 Executive summary of the arguments of the European Union 32

ANNEX B-1
INTEGRATED EXECUTIVE SUMMARY OF THE ARGUMENTS OF THE UNITED STATES
INTRODUCTION
I. THE FRAMEWORK FOR ASSESSING THE U.S. PROPOSED COUNTERMEASURES
1. Pursuant to Article 7.10 of the Agreement on Subsidies and Countervailing Measures ("SCM
Agreement"), the Arbitrator 's task is to "determine whether countermeasures {proposed by the
United States} are commensurate with the degree and nature of the adverse effects determined to
exist." The dictionary definition of degree is "the amount, level, or extent to which something
happens or is present" and of nature is "the basic or inherent features of something, especially when
seen as characteristic of it." 1 In the only arbitration to date regarding actionable subsidies, US –
Upland Cotton (22.6 II), the arbitrator considered that the ordinary meaning of these terms in Article
7.10 was consistent with these definitions.2 Determining the degree and nature of adverse effects
invites a case -specific inquiry that seeks to understand the causal findings and rationale in the
underlying proceedings.3
2. The arbitrator in US – Upland Cotton (22.6 II) further found that "'commensurate' essentially
connotes 'correspondence' between two elements,"4 but that "'commensurate' does not suggest that
exact or precise equality is required between the two el ements to be compared, i.e., in this case,
the proposed countermeasures and the 'degree and nature of the adverse effects determined to
exist'."5 Thus, the arbitrator continued, " 'commensurate' connotes a less precise degree of
equivalence than exact numerical correspondence'."6 In addition, "the expression 'adverse effects'
determined to exist' refers us to the specific 'adverse effects' within the meaning of Articles 5 and 6
of the SCM Agreement that form the basis of the underlying findings in the case at hand."7
3. The arbitrator in US – Upland Cotton (22.6 II) also observed that "it is normally not the task
of arbitrators under Article 22.6 of the Understanding on Rules and Procedures Governing the
Settlement of Disputes ("DSU") to review whether compliance has been achieved or not, as arbitral
proceedings under this provision assume that there has been no compliance, and this will normally
have been determined through compliance proceedings under Article 21.5 of the DSU."8 Of course,
in this disput e, the EU 's failure to comply has in fact been determined through a compliance
proceeding in which the findings were adopted by the DSB. 9 Indeed, the parties agreed to a
sequencing agreement in which the arbitration would be suspended while the EU 's initial claims of
compliance would be adjudicated first, and then the arbitration regarding the extent of the
countermeasures would continue if the EU was found to have failed to comply, as it was.10
4. The arbitrator in US – COOL (22.6) discussed the objecting party's burden in an arbitration.
Specifically, the arbitrator stated:
In the absence of a demonstration that the proposing party 's methodology is
incorrect, the mere submission of an alternative methodology would not meet the
objecting party's burden of proof. This is because the alternative methodology does
not, in itself, assist the Arbitrator in determining whether the result from the first
methodology is (or is not) equivalent to the level of nullification or impairment. In

1 Oxford English Dictionary online (US version), https://en.oxforddictionaries.com/definition/us/degree
(accessed November 8, 2018); Oxford English Dictionary online (US version),
https://en.oxforddictionaries.com/definition/us/nature (accessed November 8, 2018).
2 See United States – Subsidies on Upland Cotton – Recourse to Arbitration by the United States under
Article 22.6 of the DSU and Article 7.10 of the SCM Agreement, WT/DS267/ARB/2 and Corr.1, paras. 4.20,
4.40-4.48 (31 August 2009) ("US – Upland Cotton (22.6 II)").
3 See US – Upland Cotton (22.6 II), paras. 4.88-4.89. See also ibid., para. 4.43.
9 See Compliance Appellate Report, paras. 6.43-6.44.
10 Sequencing Agreement, para. 6

such a situation, it would follow from the rules on burden of proof that the objecting
party has not proved that the act at issue is WTO-inconsistent.11
II. THE LEVEL OF COUNTERMEASURES REFLECTED IN THE U.S. METHODOLOGY PAPER COMPORTS WITH
THE REQUEST FOR COUNTERMEASURES UNDER ARTICLE 22.2 OF THE DSU.
5. In accordance with its request for authorization, the United States requested countermeasures
"commensurate on an annual basis with the degree and nature of the adverse effects determined to
exist."12 At the time the Arbitrator resumed its work on July 17, 2018, 13 the "adverse effects
determined to exist" were those found in the compliance panel and appellate reports adopted by the
DSB on May 28, 2018. In its methodology paper, the United States used a series of calculations to
determine the value of the adverse effects during the period covered by the adopted findings, and
expressed that as $11.2 billion per year as of 2018. The process and output follow exactly the
approach outlined in the request for countermeasures.
6. The EU argues that the U.S. "estimate{}" 14 in its 2011 request for authorization of $7 -10
billion "{b}ased on currently available data in a recent period,"15 acts as a ceiling on the amount of
any countermeasures the United States may properly request now that the Arbitrator has resumed
its work in 2018. The EU goes on to argue that the Article 22.2 request has a "jurisdictional nature."
It then contends, quoting the EC – Bananas (22.6 – Ecuador) arbitrator, that this means that th e
$7-10 billion figure (or the formula used to derive that figure) " defines the amount of requested
suspension for purposes of this arbitration proceeding'."16 The EU notes that the Bananas arbitrator
rejected Ecuador 's effort to add "additional amounts" to the figure set out in its request for
countermeasures as not " 'compatible with the minimum specificity requirements for such a
request'."17 The EU's argument is meritless.
7. The U.S. request identified the level of countermeasures in functional terms, as the annual
level of adverse effects "determined to exist," caused to the interests of the United States by the
EU's failure to comply with the DSB 's recommendations and rulings. Therefore, under the EU 's
reasoning, it is this functional description th at "defines the amount of requested suspension for
purposes of this arbitration proceeding." While the U.S. request values "this figure" as $7-10 billion,
the result is explicitly stated as illustrative and temporary, framed as an "estimate{}" based on
"currently available data in a recent period." 18 This point is further underscored by the indication
that the United States would update the figure annually using the most recent publicly available
data.
8. Moreover, the parties requested suspension of this proceeding pending adoption by the DSB
of a finding that the EU failed to comply with the recommendations and rulings of the DSB. 19 In
doing so, they evinced the clear intention that the results of that report would inform the work of
the Arbitrator.20 This includes updating the countermeasures amount in 2018 following the nearly
seven-year compliance period, which does not pose concerns regarding the EU's due process.21

11 United States – Certain Country of Origin Labelling (COOL) Requirements – Recourse to Article 22.6 of
the DSU the United States, WT/DS384/ARB and Add.1 / WT/DS386/ARB and Add.1, para. 4.12 (7 December
2015) ("US – COOL (22.6)").
12 WT/DS316/18, p. 2 (12 Dec. 2011).
13 WT/DS316/38 (19 July 2018).
14 WT/DS316/18, p. 2 (12 Dec. 2011).
15 WT/DS316/18, p. 2 (12 Dec. 2011).
16 EU Written Submission, para. 86 (quoting EC – Bananas (22.6 – Ecuador), para. 24 (emphasis added
by EU)).
18 WT/DS316/18, p. 1 (12 Dec. 2011) (footnote omitted).
19 Sequencing Agreement, para. 6.
20 It is worth noting that in the EC – Bananas (22.6 – Ecuador) arbitration, Ecuador proposed to add to
the amount of nullification and impairment based on previously existing findings and information. EC –
Bananas (22.6 – Ecuador), para. 23. Unlike this proceeding, there had been no compliance proceeding, and no
finding that in addition to maintaining existing WTO-inconsistent measures, the responding party had adopted
new WTO-inconsistent measures.

III. THE UNITED STATES FOLLOWED THE CORRECT APPROACH IN DEVELOPING COUNTERMEASURES THAT
ARE COMMENSURATE WITH THE ADVERSE EFFECTS DETERMINED TO EXIST.
9. The U.S. countermeasures, as outlined in the U.S. methodology paper and subsequent
submissions, are faithful to the requirements of DSU Articles 22.6 and 22.7 and SCM Articles 7.9
and 7.10, as well as the guidance provided by the decisions of past arbitrators.
10. The United States based the methodology on the text of those provisions and the DSB-adopted
findings from the compliance proceeding in this dispute. The United States valued th e LCA in the
specific orders underlying the significant lost sales findings and the LCA in the specific deliveries
underlying the impedance findings, which reflect the instances of adverse effects caused by the A380
LA/MSF and A350 XWB LA/MSF in the Decemb er 2011 – 2013 period reviewed by the compliance
panel. The U.S. calculation relies on the actual transactions underlying the findings for two reasons.
First, this approach is consonant with the text of the agreement, which states SCM Agreement Article
7.9 that countermeasures must be commensurate with "the degree and nature of the adverse effects
determined to exist." And second, because these are adopted findings, they do not require
speculation as to their nature and extent.
11. The SCM Agreement disc iplines actionable subsidies when they cause adverse effects to the
interests of another Member. When significant sales are lost, or imports and exports (into the EU
and third country markets, respectively) are impeded, the United States suffers adverse e ffects in
the form of serious prejudice. It is the determination that particular subsidies cause adverse effects
that provides the basis for countermeasures. 22 Therefore, the United States methodology values
the instances of adverse effects as of the time they occur. By valuing a lost sale at the time the sale
was lost, and valuing impedance at the time the imports and exports (through deliveries) were
impeded, the U.S. calculation appropriately reflects the adverse effects determined to exist.
12. The United States methodology then re-states in 2013 dollars the value of instances of adverse
effects in 2011 and 2012 to ensure comparability, and derives an annual average value. Finally, to
make sure that the countermeasures remain commensurate with the adverse effects determined to
exist, the United States proposes a formula that accounts for inflation between 2013 and a given
year in which countermeasures are applied.
13. The U.S. methodology reflects the proper understanding of the degree and nature of t he
adverse effects determined to exist. During the original reference period, the United States
established that "the effect of the subsidy is" certain forms of serious prejudice contained in SCM
Article 6.3(a) -(c). The United States proved as much by re lying on specific instances of these
phenomena. During the first compliance proceeding, the United States again proved, based on other
specific instances after the end of the implementation period, that LA/MSF continues to cause
adverse effects. As a result, the DSB adopted findings that the effects of non-withdrawn LA/MSF is
significant lost sales of U.S. twin -aisle LCA and significant lost sales and impedance of U.S. very
large aircraft (VLA).23
14. As the DSB found, LA/MSF causes "product effects;" tha t is, it enables Airbus to launch and
bring to market new LCA models. 24 When Airbus makes a sale through an order, or gains market
share through a delivery, of an LCA model that, absent the subsidies, would not be available for sale
or delivery, a causal link is established between the LA/MSF responsible for the market presence of
that Airbus model, and the lost sale or impedance suffered by the U.S. LCA industry. 25 Thus, the
market presence of an LCA model attributable to the subsidies leads to sales and deliveries year
after year, to a variety of customers that would not otherwise occur, making these subsidies
"profound and long-lasting."26 LA/MSF subsidies to one aircraft program also have been found to
enable Airbus to build on the competitive advanta ges from LA/MSF subsidies, 27 and further, to
provide Airbus with technologies, experience, and financial benefits that make it easier to bring to

22 See SCM Agreement, Art. 7.9.
23 WT/DS316/35 (29 May 2018).
24 Compliance Appellate Report, para. 5.587.
25 See, e.g., Compliance Appellate Report, paras. 5.725-5.726, 5,740.
26 Compliance Panel Report, para. 6.1528.

market subsequent new LCA models, which the compliance appellate report recognized as "indirect
effects."28
15. In both the original and the compliance proceedings, the adverse effects findings relied on the
counterfactual proposition that the Airbus LCA model that won a particular sale or accounted for
market share would not have even been available in the market, and neither would any other non-
U.S. competing model. 29 Given these adopted findings, the existing LA/MSF subsidies ' effects of
causing significant lost sales and impedance is not limited to the specific transactions that panels
and the Appellate Body h ave cited as evidence. That effect is ongoing. It is manifest in repeated
instances of lost sales and impedance, which will continue to arise as long as LA/MSF subsidies
continue to have "product effects."
16. Therefore, to ensure that countermeasures are commensurate with the degree and nature of
the adverse effects determined to exist, the United States proposes annual countermeasures that
reflect the adopted findings in that regard, including the findings that LA/MSF subsidies continue –
in the present tense – to cause adverse effects after the end of the implementation period.30 Thus,
just as Boeing LCA compete with A380 and A350 XWB aircraft that are in the market when and as
they are because of the LA/MSF subsidies, the United States proposes to app ly countermeasures
annually until the DSB finds that the EU has come into compliance or the parties reach a positive
solution to the dispute. 31 This is also consistent with the prospective nature of WTO dispute
settlement.
17. By ignoring the nature of th e adverse effects determined to exist, especially the causal link
between the A380 LA/MSF and A350 LA/MSF subsidies and the adverse effects they were found to
continue to cause, the EU erroneously treats as the full extent of the adverse effects the five
transactions during the December 2011 – 2013 period identified in the compliance proceeding, and
deliveries during that same period to the six country markets that served as the basis for impedance
findings.
IV. ONGOING COUNTERMEASURES, AS ALMOST ALL PAST ARBITRATORS HAVE AWARDED, ARE
APPROPRIATE IN THIS PROCEEDING.
18. The continuing adverse effects of LA/MSF subsidies were the explicit focus of the successful
U.S. claim in the first compliance proceeding that "the challenged subsidies continue to cause the
same types of 'adverse effects' today."32 At the heart of both the U.S. claim and the compliance
findings of continued, or ongoing, adverse effects are the "product effects" of LA/MSF and their
operation in the LCA industry where the subsidy -enabled market presence of Airbus LCA has an
obvious and direct adverse impact on Boeing LCA.
19. Consistent with the original findings of adverse effects, the compliance findings of adverse
effects are based on the "direct" and "indirect" product effects that existing LA/MSF has in enabling
Airbus to offer and deliver LCA where it would otherwise be unable to do so. LA/MSF thus allows
Airbus to take sales, deliveries, and market share that it would not otherwise obtain, resulting in
continued adverse effects to the United States for as long as those product effects operate.
20. Relying in large part on the compliance panel 's findings, the appellate report concluded that
existing subsidies did indeed continue to cause adverse effects into the post-implementation period,
and it did so in terms that leave no doubt as to the ongoing nature of LA/MSF's adverse effects:
• "{O}ur discussion of the Panel 's findings reveals that the LA/MSF subsidies existing in the
post-implementation period – i.e. the A380 and A350XWB LA/MSF subsidies – enabled Airbus
to proceed with the timely launch and development of the A350XWB, and to bring to market

28 See Compliance Appellate Report, paras. 5.637-5.639.
29 See Original Appellate Report, para. 1264; Compliance Appellate Report, paras. 5.725-5.726, 5,740.
30 See Compliance Appellate Report, paras. 5.413, 5.605, 5.609, 5.640, 5.646-5.647, 5.694, 5.768,
6.37(a), 6.43(a).
31 See DSU, Art. 22.8. The United States notes that the EU attacks a straw man by quoting a phrase in
the U.S. methodology paper out of context. The United States never suggested, as the EU implies, that its
basis for applying countermeasures going forward is that doing so is common and administrable. See EU
Written Submission, para. 92. Rather, the U.S. point was that it was using a one-year period, rather than, for
example, a 25-month period, because considering imports on an annual basis is both common and easily
administrable. The United States could have sought a 25-month countermeasure figure that would apply in
each 25-month period. But that would be unusual and more difficult to administer.
32 Compliance Panel Report, para. 6.1112 (emphasis original).

and to continue developing the A380. Both these events, as the above analysis shows, were
crucial to renew and sustain Airbus' competitiveness in the post-implementation period."33
• "{T}he Panel's findings support the conclusion that the sales of the A350XWB identified in
Table 19 of the Panel Report represent 'significant lost sales' to the US LCA industry within
the meaning of Article 6.3(c) of the SCM Agreement, and that such lost sales were the effect
of the LA/MSF subsidies existing in the post -implementation period. This conclusion also
finds support in the analytical framework adopted by the panel and the Appellate Body in
the original proceedings, as well as in a number of the Panel's findings, including its finding
concerning the 'product effects' of the LA/MSF subsidies existing in the post-implementation
period on Airbus ' timely launch of the A350XWB , and the existence of sufficient
substitutability between Boeing's and Airbus' twin-aisle product offerings."34
• "{T}he orders identified in Table 19 of the Panel Re port in the twin -aisle LCA market
represent 'significant lost sales ' to the US LCA industry and, therefore, that the LA/MSF
subsidies existing in the post-implementation period are a genuine and substantial cause of
serious prejudice to the United States w ithin the meaning of Article 6.3(c) of the SCM
Agreement."35
• "{T}the Panel's findings support the conclusion that the sales of the A380 identified in Table
19 of the Panel Report represent 'significant lost sales ' to the US LCA industry within the
meaning of Article 6.3(c) of the SCM Agreement, and that such lost sales were the effect of
the LA/MSF subsidies existing in the post-implementation period. This conclusion also finds
support in the analytical framework adopted by the panel and the Appellate Bod y in the
original proceedings, as well as in a number of the Panel 's findings, including its finding
concerning the 'product effects ' of the LA/MSF subsidies existing in the post -
implementation period on Airbus' continued offering of the A380, and the existence
of sufficient substitutability between Boeing's and Airbus' VLA product offerings."36
• "{T}he orders identified in Table 19 of the Panel Report in the VLA market represent
'significant lost sales ' to the US LCA industry and, therefore, that the LA/M SF subsidies
existing in the post-implementation period continue to be a genuine and substantial cause
of serious prejudice to the United States within the meaning of Article 6.3(c) of the SCM
Agreement."37
21. In sum, the DSB adopted findings both that ex isting LA/MSF subsidies have adverse effects
of an ongoing, or continuing, nature, and that the subsidies were continuing to cause – in the present
tense – such adverse effects throughout the post-implementation period. Thus, there is no merit to
the EU's objections to annual countermeasures, or its attempts to again limit the adverse effects
caused by LA/MSF to the specific instances identified in the reference period. The DSU provides for
countermeasures until the EU is found to have complied in an appropriate forum and the DSB adopts
the findings, or a positive solution is reached.
V. EU OBJECTIONS TO THE U.S. METHODOLOGY ARE ERRONEOUS
A. The Proper Counterfactual
22. However, the EU has alleged no anomaly with the compliance reference period – December
2011 – 2013 – in terms of LCA prices or other inputs into the U.S. methodology that were not
germane to the adopted compliance findings. Thus, the EU has failed to prove than any such data
utilized by the U.S. methodology are "unrepresentative." The EU 's arguments in this respect
therefore fail.
23. The fact is that the adverse effects flow from the product effects caused by the LA/MSF
subsidies. Those product effects continue to result in significant lost sales and impedance. The
subsidies are in no way specific to certain sales or deliveries. Thus, because the DSB adopted
findings that, following the end of the RPT, the causal chain remained intact, there is no basis to
treat the instances of adverse effects that manifested in the December 20 11 – 2013 period as the

33 Compliance Appellate Report, para. 5.647 (emphasis added).
34 Compliance Appellate Report, para. 6.31 (emphasis added).
35 Compliance Appellate Report, para. 6.31(a) (emphasis added).
36 Compliance Appellate Report, para. 6.37 (emphasis added).
37 Compliance Appellate Report, para. 6.37(a) (emphasis added).

full extent of the adverse effects. Rather, as the compliance panel observed, the adverse effects of
LA/MSF are "profound and long-lasting."38
24. The EU alleges that the United States mischaracterizes the causal pathway "to turn adverse
effects findings based on a temporally-limited acceleration effect into findings of adverse effects that
apply in perpetuity."39 According to the EU, "the first compliance panel found, and the Appellate
Body upheld, that the subsidised element of A380 MSF loans and A350XWB MSF loans accelerated
the launch of the A380 and the A350XWB."40
25. But the EU is flatly wrong. As we already discussed, the compliance panel in US – Large Civil
Aircraft specifically contrasted the acceleration effects in tha t dispute with the product creation
effects found by the original and compliance panels in this dispute.41 Indeed, the EU itself has stated
in this proceeding:
Where the market presence of a model of aircraft, at the time of a sales campaign,
was attributable to the direct effects and indirect effects from subsidies, this served
as the basis for findings of significant lost sales, on the notion that, absent the
subsidies, the Airbus product would not have competed in the sales
campaign, and Boeing would instead have won the sale. Similarly, these findings
relating to the market presence of Airbus ' models also served as the
eventual basis for findings of other forms of volume effects (and specifically,
impedance).42
Thus, although it repeatedly fights the c onclusion, at least once in this proceeding the EU has
specifically and concisely acknowledged that both the significant lost sales findings and the
impedance findings were based on the unavailability of the Airbus LCA in the absence of LA/MSF.
This adopted multilateral finding – including the causal pathway by which the presence of Airbus
LCA continually causes Boeing to lose sales and deliveries it would otherwise obtain – remains in
effect and cannot be disturbed. Accordingly, contrary to the EU's assertions, the U.S. methodology
results in annual countermeasures commensurate with the degree and nature of the adverse effects
determined to exist.
B. Counterfactual Airplane Prices
26. The EU has also faulted the United States for the prices it used for calculating significant lost
sales and impedance values. With respect to lost sales, the EU objects to the United States' use of
somewhat contemporaneous orders (for all but one of the customers) by the same customer of the
relevant Boeing model. The EU's allegations fail to prove that the U.S. approach would render the
countermeasures not commensurate.
27. The EU's criticisms typically take the form of pointing out some way in which these comparator
orders are not identical to the counterfactual order. For example, in some instances, the number of
aircraft ordered is not exactly the same. But the EU 's burden requires more than demonstrating
that the proxies the United States chose are imperfect. Of course, they are. They are proxies.
There is no actual information available; it's a counterfactual order. The proxies the United States
chose are eminently reasonable, and therefore, do not result in countermeasures that are not
commensurate.
28. It would be erroneous to value the instances of lost sales from the first compliance proceeding
as if they involved orders for Airbus models other than those identified in the first compliance
appellate report. 43 To do so would amount to a collateral attack on the findings in the reports
adopted by the DSB.
29. In addition, such an approach would presume erroneously that, if a customer actually
converted an original order for a given Airbus model ( e.g., the A350 XWB-1000) to another Airbus
model (e.g., the A350 XWB -900), then the same customer in the counterfa ctual situation would

38 Compliance Panel Report, para. 6.1528.
39 EU RAQ 56, para. 48.
40 EU RAQ 56, para. 48.
41 See United States – Large Civil Aircraft (21.5) (Panel), para. 9.127, note 2849.
42 Exhibit A to EU Preliminary Ruling Request, para. 41 (citing Compliance Panel Report, paras. 6.1785-
6.1789, 6.1806-6.1817) (emphasis added).
43 See U.S. RAQ 58, paras. 14-16. See also Compliance Appellate Report, para. 5.705, Table 10 and

necessarily have converted the originally ordered Boeing model ( e.g., the 777-300ER) to another
Boeing model ( e.g., the 787 -10). Conversion activity can result from various factors, including
factors specific to Airbus models and Airbus's customer relationships, such that it cannot be assumed
that actual Airbus conversions would translate to counterfactual Boeing conversions.
30. The specifications of the aircraft that each customer actually ordered from Boeing provide the
best proxy for the specifications of aircraft they likely would have ordered in the counterfactual. The
price that they paid accordingly provides the best measure of the value of the aircraft that would
have been ordered in the counterfactual. In addition, there are not reliable methods to adjust LCA
pricing for differences in the countless physical characteristics and other specifications between
Airbus and Boeing aircraft.
31. The United States also notes that these prices are just proxies for counterfactual sales. Even
if the requisite information was available and there was a reliable methodology to make price
adjustments, there is no indication that any differences in physical characteristics or other
specifications between the Airbus aircraft ordered and t he counterfactual Boeing model would
necessitate price adjustments so large as to affect the conclusion whether proposed
countermeasures are "commensurate." Accordingly, there is no basis to undertake an immensely
complicated, unreliable, and improper exe rcise of adjusting the submitted prices, if that indeed is
what the EU is advocating.
32. The EU argues that the Arbitrator should attempt to exclude non -U.S. inputs from the
valuation of Boeing aircraft in the calculation of countermeasures. The EU goes so far as to ask that
all "engine costs" should be excluded from the calculations because one Boeing model, the 787,
offers customers a choice between Rolls Royce engines and General Electric engines. 44 As
demonstrated previously, the EU 's argument is u ntenable, and would inherently result in
countermeasures that are not "commensurate" because the goods experiencing serious prejudice
are U.S. LCA, not the U.S. parts thereof. 45 The EU 's argument is also incoherent: for LCA
incorporating millions of parts from several tiers of suppliers, it would exclude complex assemblies,
such as engines, based on the country in which they were assembled, without regard to any U.S. -
origin parts in such assemblies.46
33. In sum, the EU 's criticisms of the U.S. lost sales evidence are meritless. They include a
mixture of inaccurate guesswork, legal error, and demands for documentation that is now on the
record. These arguments are emblematic of the EU 's failure to demonstrate that the U.S.
calculations are not "commensurate with the degree and nature of the adverse effects determined
to exist."
C. Alleged Dissipation of Adverse Effects
34. The counterfactual launch of the A380 and A350 XWB is a necessary, but not necessarily
sufficient, condition for the dissipation of adverse effects based on sales and deliveries of the A380
and A350 XWB. That is, as long as the A380 and A350 XWB would not be available for offer in the
counterfactual situation absent existing LA/MSF – and therefore not available for delivery – the sales
and deliveries they take during that period from competing Boeing LCA continue to represent adverse
effects caused by the subsidies.
35. However, the point at which the A380 and A350XWB would launch in the counterfactual is not
necessarily the point at which adverse effects would cease. There are several reasons why adverse
effects would not cease at the moment of a counterfactual launch in this dispute, including those
discussed below.
36. First, A380 LA/MSF would still contribute to the adverse effects caused in the twin -aisle
market. Both A380 LA/MSF and A350 XWB LA/MSF – assessed through aggregation as a single
subsidy – were found to cause significant lost sales in the twin-aisle market. Therefore, both A380
LA/MSF and A350 XWB LA/MSF would remain out of compliance unless the EU somehow could have

44 See EU RAQ 52, para. 3 (seventh bullet).
45 See U.S. Written Submission, paras. 266-269.
46 See U.S. Written Submission, para. 269.

demonstrated, in addition to a counterfactual A380 launch, that Airbus also would have been able
to offer and deliver the A350 XWB in the absence of the aggregated LA/MSF subsidies.
37. Second, there would still be adverse effects in the form of impedance in the VLA market. The
findings of impedance in the VLA market were based on deliveries. Delivery of an aircraft
necessarily lags by several years behind the launch of an aircraft. The real-world A380 was launched
in 2000, but first delivery did not occur until 2007.47 Therefore, even if the counterfactual launch of
the A380 marked the moment at which a customer could order A380s, at least another seven years
would have to pass before Airbus cou ld make deliveries of the A380. Accordingly, counterfactual
launch will not coincide with an end to impedance resulting from LA/MSF-enabled A380 deliveries.
38. Third, there may even still be significant lost sales involving the A380 in the global VLA product
market after the counterfactual A380 launch. A later launch can have several important effects on
a sales campaign. For example, market perceptions regarding the value proposition an LCA model
offers can be strengthened by a model 's demonstrated success in service. A manufacturer cannot
benefit in early sales campaigns from such demonstrated success. In addition, the timing of a launch
may affect the delivery slots a manufacturer is able to offer in a particular campaign. Whether or
not the subsidies would continue to cause significant lost sales in the global VLA market after the
counterfactual A380 launch would be a fact -specific inquiry assessed on the basis of the relevant
campaign-specific evidence. If these or other factors made it so that Airbus's offer in a particular
campaign would have been less attractive in the counterfactual, and as a result Boeing would have
won the sale, then the subsidies would still be the cause of a lost sale even though in the
counterfactual the A380 would have launched.
39. As the United States has demonstrated, these are not proper considerations in the context of
this arbitration. However, even in the context of a compliance proceeding, compliance would require
that any existing subsidies no longer cause adve rse effects. In particular, with respect to the VLA
market, the EU would have failed to achieve compliance if, absent existing LA/MSF, Boeing would
have made additional significant sales. To be sure, establishing compliance by severing the causal
link would have meant showing that the A380 would have been launched in the absence of LA/MSF.
But demonstrating a counterfactual launch alone would be insufficient if it were still the case that,
for any of the reasons listed above or based on any other conside rations, Boeing still would have
made sales after the end of the RPT to customers that instead ordered the A380.
40. For these reasons, even if a counterfactual launch date had been established, it is not certain
that any of the forms of adverse effects in any of the relevant product markets would have ceased
at the time of that launch. Of course, the EU established no such thing. The compliance proceeding
found that the subsidies cause significant lost sales and impedance in the VLA product market, and
significant lost sales in the twin-aisle product market.
41. There are other ways in which the adverse effects caused by A380 LA/MSF and A350 XWB
LA/MSF could dissipate. In particular, if generations of LCA passed and the technological knowledge,
experience, and financial gains from the subsidies no longer bore a significant relationship with the
LCA models being sold at that time, the effects could be found to have dissipated. Specifically, the
compliance panel explained:
Nevertheless, it is possible to envisage a number of different scenarios pursuant to
which the "product -creating" effects of the pre -A350XWB LA/MSF subsidies might
well come to an end. One such possibility could be through the launch of new
unsubsidized models of Airbus LCA. The introdu ction of a new unsubsidized model
of Airbus LCA would ensure that its market presence could not be attributable to the
direct effects of LA/MSF. Yet because of the particular features of LCA production,
it is highly unlikely that a new unsubsidized model of Airbus LCA could be launched
today in the absence of the "learning", scope and financial effects associated with
the LA/MSF subsidies provided for certain (but not necessarily all) previous models
of LCA. Indeed, as already noted, it is undisputed that "learning" effects are
fundamental to the very existence of any competitive LCA producer. However, were
a second unsubsidized LCA model to be developed, it is possible that the indirect
effects of the LA/MSF subsidies provided for the purpose of developi ng previous

47 See Compliance Panel Report, paras. 6.1220, 6.1383 (citing to a 2011 Airbus presentation entitled
"A380 Update: Four Years in Service").

models of LCA would play a relatively minor role in its launch and bringing to market
compared with the first unsubsidized new model of Airbus LCA. The impact of the
same indirect effects on a third unsubsidized new model of Airbus LCA would b e
even smaller as its development would most likely be based on mainly the "learning",
scope and financial effects generated from the first and second unsubsidized models
of Airbus LCA.48
42. Finally, the United States recalls that these findings were adopted by the DSB and cannot be
re-evaluated in this arbitration. Article 7.10 of the SCM Agreement requires the Arbitrator to
determine whether the proposed countermeasures are commensurate with the degree and nature
of the adverse effects determined to exi st. It would therefore be improper to replace the degree
and nature of the adverse effects determined to exist with new adverse effects findings. The EU is
welcome to argue (again) that the adverse effects have dissipated. The United States is confident
any such effort will fail (again). However, this is not the forum for those arguments.
CONCLUSION
43. Effective countermeasures are the last remaining hope to force the EU to reckon with the
pernicious effects its LA/MSF subsidies cause, and hopefully achieve a solution to this longstanding
failure to comply with its WTO obligations. For the United States, as with the DSU, these
countermeasures are not the preferred option. But after 14 years of litigation, and ten years since
the original p anel findings against the EU, without a single, meaningful step by the EU to reform
LA/MSF – and, in fact, a period in which the EU reinforced its WTO-inconsistent behavior by providing
the latest and largest tranche of subsidized LA/MSF to date (and with no guarantee that it will not
once again do the same) – this option is all that remains.
44. The EU 's efforts to greatly expand the limited scope of this proceeding to evade the
consequences of its WTO-inconsistent behavior for longer still, represent an attack on the very utility
of dispute settlement at the WTO. Despite that the EU has provided these WTO-inconsistent LA/MSF
subsidies to every single Airbus LCA program, and that the EU has taken zero meaningful steps to
address these subsidies or the effe cts they cause, the EU seeks to avoid countermeasures
commensurate with the degree and nature of the adverse effects determined by the WTO to exist.
The EU tries to guarantee itself the right to continue its course of unabated, WTO -inconsistent
subsidies with limited and ineffectual, if any, consequences. The EU therefore, in effect, seeks to
have the Arbitrator declare that the WTO rules and dispute settlement system simply cannot deal
effectively with the EU's massive subsidization of Airbus, or with subsidies of this nature in general.
45. But the EU is wrong. The DSB adopted reports twice, making clear that the EU 's LA/MSF
subsidies breach the EU's WTO obligations by causing massive adverse effects to the United States.
The SCM Agreement and the DSU explicitly provide for the United States now to obtain authorization
to impose countermeasures commensurate with the degree and nature of those adverse effects. To
deny the United States that right would be to cement in perpetuity the imbalance imposed by the
EU's subsidies. It is long past the appropriate time for the EU to argue about whether, or the extent
to which, its subsidies cause adverse effects.
46. We must distinguish between so-called technical errors with the U.S. methodology alleged by
the EU, and the EU's broader attempt to draw out and expand this proceeding far beyond its intended
purpose. The EU may not like the potential consequences of the requested countermeasures. But
they are unfortunately necessary to induce the EU to finally confront the economic pain its subsidies
have caused for at least two decades – a burden the United States alone has shouldered for the
duration of this long dispute. It is our hope that, consistent with the DSU and the parties ' joint
sequencing agreement, the "technical" disagreements can be adjudicated relatively quickly, so that
the balance of concessions can be restored and the EU is given appropriate additional incentive to
pursue in earnest a lasting solution.

48 Compliance Panel Report, para. 6.1529 (emphasis original).

ANNEX B-2
EXECUTIVE SUMMARY OF THE ARGUMENTS OF THE EUROPEAN UNION

I. INTRODUCTION
1. The US methodology results in an amount of countermeasures that is not "commensurate"
with the degree and nature of the adverse effects determined to exist, as required under Articles
7.9 and 7.10 of the Agreement on Subsidies and Countervailing Measures ("SCM Agreement"), and
that is inconsistent with the US request for countermeasures under Article 22.2 of the DSU ("Article
22.2 request").1
2. The United States designed an approach purpor ting to value the "precise findings"2 of five
specific lost sales, and impedance in six specific third-country markets for very large aircraft ("VLA"),
each during the December 2011 to 2013 period.3 The total value of those adverse effects, according
to the United States and before correcting multiple errors it has made, is USD 22 billion. USD 22
billion is an exceptionally high amount. Even a fraction of that amount is significantly larger than
any countermeasures authorised in previous arbitrations. However, the US request does not stop
there. The United States asks for an amount of countermeasures that is multiple times the value of
the "precise findings" of adverse effects. The United States asks to multiply the precise findings of
past adverse effects an indefinite number of times, and to authorise, on that basis, the full amount
of countermeasures – USD 22 billion – on a recurring basis, again and again, without bound. Such
recurring counter measures are evidently not "commensurate" with the "precise findings " of the
adverse effects determined to exist.4 Below, the European Union summarizes key flaws in the United
States' approach.
II. THE ARTICLE 22.2 REQ UEST PROVIDES NO BAS IS FOR AUTHORIZING
COUNTERMEASURES FOR FINDINGS OF IMPEDANCE
3. In its Article 22.2 request, the United States requests countermeasures that correspond to
lost sales and displacement, but not impedance. 5 Since the Article 22.2 request fails to meet the
applicable "specificity" requirements with respect to adverse effects in the form of "impedance", the
Article 22.2 request provides no basis for requesting, let alone authorising, countermeasures for
findings of impedance.
4. An Article 22.2 request must "set out a specific level of suspension, i.e. a level equivalent to
the nullification and impairment caused by the WTO -inconsistent measure".6 The United States
submits that its Article 22.2 request specifi es the level of countermeasures in "functional terms",
rather than in numerical terms, and that those "functional terms" cover impedance.7 The United
States errs.
5. First, the US reading of its Article 22.2 request is unsupported by the terms of that request.
The amount requested by the United States "corresponds to the annual value of lost sales, of imports
of US large civil aircraft displaced from the EU market, and of exports of US large civil aircraft
displaced from third country markets".8 Thus, the purported "functional terms" in the Article 22.2
request specifically identify lost sales and displacement, but do not identify impedance, and hence
fail to cover impedance.
6. Second, the erroneous reading advanced by the United States would imply that its request
fails to "set out a specific level of suspension ".9 The United States asserts that the level of
countermeasures in functional terms corresponds to "the annual level of adverse effects 'determined

1 WT/DS316/18.
2 US Methodology Paper, para. 25 (citing Decision by the Arbitration Panel, US – Upland Cotton (Articles
22.6 and 7.10 – US), para. 4.49).
3 US Methodology Paper, paras. 26-30.
4 US Methodology Paper, para. 25.
5 WT/DS316/18.
6 Decision by the Arbitration Panel, EC – Bananas III (Ecuador) (Article 22.6 – EC), paras. 21, 24
(emphasis added); Decision by the Arbitration Panel, EC – Hormones (Canada) (Article 22.6 – EC), para. 16.
7 US Written Submission, para. 74; US Response to Arbitration Panel Question 133, paras. 145-149.
8 US Response to Arbitration Panel Question 133, para. 146 (emphasis and underlining added).
9 Decision by the Arbitration Panel, EC – Bananas III (Ecuador) (Article 22.6 – EC), paras. 21, 24
(emphasis added); Decision by the Arbitration Panel, EC – Hormones (Canada) (Article 22.6 – EC), para. 16.

to exist,' caused to the interests of the United States by the EU 's failure to comply with the DSB 's
recommendations and rulings".10 In the US view, the references in its Article 22.2 request to the
specific types of adverse effects ( i.e., lost sales and displacement), and to the amount of adverse
effects (i.e., "between $7 and $10 billion per year"), are not part of this description, but merely
"explained how the United States valued those adverse effects at that time".11
7. If that is the proper construction of the Article 22.2 request, the request does not provide
any specificity whatsoever as regards the level of countermeasures, either in terms of the types of
adverse effects, or in terms of amount requested by the United States. Instead, the purported
"functional description" advanced by the United States would merely paraphrase the language of
Articles 7.9 and 7.10 of the SCM Agreement. It follows that, if that is the proper construction of the
Article 22.2 request, it does not support the authorisation of any countermeasures whatsoever.
III. THE UNITED STATES ERRS IN REQUESTING RECURRING COUNTERMEASURES
8. Without any explanation in its Methodology Paper, the United States took the position that
it must be granted authorisation to impose not only countermeasures commensurate with the
specific adverse effects determined to exist in the first compliance proceedings, but, in addition,
recurring countermeasures for an indefinite period and total amount. For numerous reasons, the
United States errs in requesting recurring countermeasures.
A. The US' "static" approach provides no basis for recurring countermeasures
9. The approach adopted by the United States does not permit authorisation of recurring
countermeasures.12 The US approach is premised on a particular understanding of the treaty terms
"commensurate with the degree and nature of the adverse effects determined to exist ", in Articles
7.9 and 7.10 of the SCM Agreement.
10. The United States has adopted what one might refer to as a "static" approach, which is based
on the following related legal premises.13 First, the US approach is premised on the understanding
that the term "determined" (which is the past tense) refers to what has already been "determined"
in the compliance panel report, as modified by the Appellate Body report in the first compliance
proceedings. Second, and relatedly, the US approach is premised on the understanding that the
term "exist" refers to the existence or non-existence of a particular phenomenon between December
2011 and 2013 (that is, within defined temporal parameters related to the past). Third, and
relatedly, the US approach is premised on the understanding that the term "exist" does not allo w
the Parties and the Arbitration Panel – in determining the continued existence or non-existence of a
particular phenomenon – to consider any argument or evidence related to the period after December
2013 (that is, after the defined parameters related to the past). For the specific purposes of this
argument, the European Union does not take issue with these legal premises. They are, therefore,
not in dispute between the Parties.
11. However, in light of the US static approach, the Arbitration Panel cannot authorise recurring
countermeasures, which are premised on the proposition that the United States is experiencing the
same degree of adverse effects over time, including up to the present. This would amount to
assuming, in an entirely speculative fashion, t hat new adverse effects, which have not been
determined to exist (and may not, under the very approach proposed by the United States, be
assessed), will occur to the same degree over time. Indeed, t he United States acknowledges that
its "static" approach does not show, and is not designed to show, that the "adverse effects
determined to exist" consist of any sales other than the five lost sales identified, or impedance in
any market other than the six markets identified during the December 2011 to 2013 period.14 Even
if the US approach were to provide a basis for countermeasures calibrated accurately to the "precise
findings" of adverse effects determined to exist, it provides no basis for recurring countermeasures
for an indefinite period and total amount.

10 US Response to Arbitration Panel Question 133, para. 149 (emphasis added).
11 US Response to Arbitration Panel Question 133, paras. 146, 149 (emphasis in original); US Written
Submission, para. 74.
12 See, e.g., EU Responses to Questions 8, 9, and 12; EU Oral Statement, paras. 21-25.
13 See, e.g., US Written Submission, paras. 5, 9, 21, 53, 70, 77, and Section IV.B.
14 US Response to Arbitration Panel Question 19, para. 29.

B. The US errs in arguing that the precise adverse effects findings support the
conclusion that the same adverse effects still exist to a similar degree six
to eight years later, in 2019, and in future years
12. Because its own methodology is not even designed to calibrate the level of countermeasures
to any adverse effects over time, the United States attempts a different approach to establish the
required correspondence. The United States argues that the first compliance pane l, and the
Appellate Body, made findings about what would be present adverse effects in 2019 and beyond .
Thus, in the US view, the precise findings of adverse effects in the December 2011 to 2013 period
support the conclusion that the same degree of adverse effects is present today, six to eight years
later, and will continue unchanged into the future. The United States is wrong.15
13. First, the United States asserts that, even today, the A380 and the A350XWB "would not
have even been available in the market" in the absence of the subsidy measures.16 No such findings
have ever been made. The United States simply assumes a counterfactual world without the A380
and the A350XWB. This assumption is not based on the required "plausible or reasonable "
counterfactual, in light of the findings in the first compliance proceedings and the EU argument and
evidence.17
14. In the original and the first compliance proceedings, the United States chose, and succeeded
with, an approach to establishing causation based on so-called "product effects" of the subsidies on
the "as and when " launch of these aircraft at specific moments in time – that is, an acceleration
effect. That causation theory served the United States well. However, the original and first
compliance panels did not make findings about the counterfactual launch dates for the A380 and the
A350XWB.18 That is, they did not determine when the aircraft would have been launched absent
subsidisation. Neither the original panel nor the first compliance panel found that the A380 and the
A350XWB would not have been launched by 2011 -2013; nor did they find that the aircraft would
not have been launched as of today; and they certainly did not find that the aircraft would never be
launched in the future.
15. Moreover, in the present proceedings, employing an approach developed by the United
States itself in the first compliance proceedings, the European Union has demonstrated that the
A380 and the A350XWB, in their current form, would, at a minimum, have been launched as of
today, and indeed several years earlier .19 The United States has not even addressed, much less
contested, that showing.
16. Instead of engaging with the European Union's evidence, the United States takes the position
that this evidence and argument involve an improper "collateral attack" on the findings on the causal
pathway in the first compliance proceedings. 20 The United S tates errs. The European Union 's
demonstration of the counterfactual launch dates for the A380 and the A350XWB does not constitute
a "collateral attack" on the findings adopted by the DSB. 21 Unlike the United States, the European
Union takes the findings of the first compliance proceedings at face value, and accepts them. It is
the United States that mischaracterises the findings in the first compliance proceedings concerning
the causal path way, as a means of justifying its request for recurring countermeasures for an
indefinite period and total amount. If anything, it is the US assertion – i.e., that the A380 and the
A350XWB would not have come into existence by 2013, or even today – that constitutes a "collateral
attack" on adopted findings.

15 See, EU Framework Response, paras. 24-31; EU Responses to Arbitration Panel Questions 4, 8, 10,
11, 12, 14, 15, 56.
16 US Written Submission, para. 82.
17 Decision by the Arbitration Panel, US – Washing Machines (Article 22.6 – US), paras. 3.10-3.11. See
also Decision by Arbitration Panel, US – Gambling (Article 22.6 – US), paras. 3.27, 3.30.
18 See, e.g., EU Response to Arbitration Panel Questions 4, 56 (paras. 48-68). See also Panel Report,
EC – Large Civil Aircraft, paras. 7.1944-7.1949; Panel Report, EC – Large Civil Aircraft (Article 21.5 – US),
paras. 6.1717.
19 See, e.g., EU second written submission in EC – Large Civil Aircraft (Article 21.5 II – EU), 28 January
2019, (Exhibit EU-97-HSBI and BCI), Section III.C.4; EU First Written Submission in EC – Large Civil
Aircraft (Article 21.5 II – EC), October 2018, (Exhibit EU-A-BCI), Sections V.B.4.d, V.B.5.e. See also EU
Responses to Arbitration Panel Questions 4 (paras. 119-123), 56 (paras. 62-68), 101; EU Opening Statement,
para. 28.
20 US Response to Arbitration Panel Question 18, paras. 25, 27; Question 19(b), para. 32.
21 US Response to Arbitration Panel Question 18, para. 25.

17. Second, the United States submits that the adverse effects determined to exist would, ad
infinitum, remain "present", because the findings at issue were phrased in the present tense.22 This
argument is not only grammatically and legally incorrect, it is also at odds with the US
acknowledgement that the findings were made with respect to the December 2011 to 2013 period.23
18. Third, the United States submits that the first compliance panel made findings not of specific
instances of adverse effects in December 2011 to 2013, but rather of "various forms of serious
prejudice that LA/MSF subsidies continue to cause today through its {sic} product effects ".24 Yet,
the first compliance panel made no findings about adverse effects today, in 2019, or in future years.
As the United States acknowledges, the adverse effects determined to exist "consist" of "precise
findings" of particular lost sales and impedance in particular geographic markets, during the
December 2011 to 2013 period.25
C. The United States erroneously rejects the relevance of the non -recurring
nature of the subsidy measures
19. Holding all other factors constant, when a measure is continuous, or recurring, it may cause
continuous, or recurring, trade effects over time. Assuming a representative period is identified, an
arbitration panel could then authorise an amount of recurring countermeasures that is calibrated to
the recurring trade effects caused by the recurring measure. In the only previous arbitration under
Article 7.10 of the SCM Agreement, this is precisely what happened. The arbitration panel in US –
Upland Cotton (A rticles 22.6 and 7.10 – US) authorised recurring countermeasures because the
subsidies were recurring and made under a continuous programme. The United States agrees. 26
Based on proper econometric modelling and analysis proposed by the parties, that arbitration panel
authorised recurring countermeasures calibrated to adverse effects resulting from recurring
subsidies under a programme.
20. In the present case, the United States also tried to establish the existence of an MSF subsidy
programme. It failed. However, the United States requests countermeasures as if it had succeeded
on that claim. It asks to multiply an indefinite number of times the "precise findings"27 of adverse
effects from the past into the present and the future, and to ignore the non-recurring nature of the
subsidy measures, of which, as the Appellate Body recently confirmed again, the effects "ordinarily
dissipate" over time.28
21. The case law shows a perfect parallelism between (i) the (non-) recurring nature of the
measure at issue and (ii) the (non-) recurring nature of the countermeasures authorised by past
arbitration panels. Recurring countermeasures have been authorised only where the measure was
recurring, whereas only non-recurring countermeasures have been authorised where the measure
was non-recurring.29 The United States erroneously asks the Arbitration Panel to deviate from the
consistent past case law, and to authorise recurring countermeasures (for an indefinite period and
total amount) in response to non-recurring measures, despite the Appellate Body 's explicit
confirmation that the adverse effects of non-recurring subsidies "ordinarily dissipate" over time.30
E. Recurring countermeasures do not reflect a "reasonable estimation" of the
"actual continued adverse effects of the {subsidies} over time"
22. The Parties agree on one important point – i.e., as explained by the arbitration panel US –
Upland Cotton (Articles 22.6 and 7.10 – US), to meet the test of "commensurateness" under Article

22 See, e.g., US Written Submission, paras. 83, 86, 116.
23 EU Response to Arbitration Panel Question 11, paras. 241-252.
24 US Response to Arbitration Panel Question 17, para. 18 (emphasis added). See also ibid., para. 16.
25 US Methodology Paper, para. 29. See also EU Response to Arbitration Panel Question 56, paras. 24-
33.
26 US Response to Arbitration Panel Question 59, para. 21 (emphasis added).
27 US Methodology Paper, para. 25.
28 Appellate Body Report, US – Large Civil Aircraft (Article 21.5 – EU), para. 5.336. See also Appellate
Body Report, EC – Large Civil Aircraft (Article 21.5 – US), para. 5.371 (footnote 932); EC – Large Civil Aircraft,
para. 713.
29 See, e.g., EU Written Submission, paras. 108-112; EU Response to Arbitration Panel Question 20,
paras. 338-342.
30 See above footnote 28.

7.10 of the SCM Agreement, recurring countermeasures must reflect a "reasonable estimation" of
"actual continued adverse effects of the {subsidies} over time". 31,32
23. In its belated and ex post attempt to justify its request for recurring countermeasures, the
United States asserts that its approach achieves the required commensurateness, or
correspondence, under Article 7.10 of the SCM Agreement, arguing as follows:
the U.S. approach of valuing the instances of adverse effects underlying
the adopted findings is, … representative of the adverse effects
LA/MSF subsidies will continue to cause in future years (subject to
inflation). And, consistent with US – Upland Cotton (22.6 II), the U.S.
approach provides the most reasonable estimation of continued
adverse effects over time.33
24. The substantial time gap of, at least, six to eight years between the December 2011 to 2013
period and today, 2019, enables the Arbitration Panel to test the United States' assertion based on
the most recent available data and evidence. This does away with the need to address any alleged
"inherent uncertainty"34 about how present adverse effects of the non -recurring subsidy measures
at issue, if any, may "dissipate"35 further in the future.
25. Indeed, to test the United States ' assertion, there is no need for the Arbitration Panel to
speculate about the future. Using the most recent available data and evidence, the European Union
has demonstrated that the specific instances of adverse effects determined to exist in December
2011 to 2013 do not provide a "reasonable estimation" of "the actual continued adverse effects of
the {subsidies} over time".36 Specifically, the European Union submitted the following evidence and
argument:
(a) First, using the methodology developed by the United States ' own expert in the first
compliance proceedings, the European Union established that, in the counterfactual
world, the relevant aircraft (A380 and A350XWB), in their current form, would have been
in the marketplace today, without the subsidies.37,38
The United States has not contested that showing, despite the fact that it directly rebuts
and disproves the basis for the United States ' assertion that the adverse effects
determined to exist in December 2011 to 2013 provide a reasonable estimation of
adverse effects today, and in the future. That is, the United States asserts
correspondence based on the erroneous assertion that the relevant aircraft would not be
available in the market today, and in future years.39
(b) Second, the European Union submitted its first and second written submissions from the
second compliance proceedings, showing that the specific instances of adverse effects
determined to exist in December 2011 to 2013 do not provide a reasonable estimation
of adverse effects today.40
The United States has not contested that showing.

31 Decision by the Arbitration Panel, US – Upland Cotton (Articles 22.6 and 7.10 – US), para. 4.117.
32 See, e.g. US Response to Arbitration Panel Question 19(b), paras. 31, 35; US Response to Arbitration
Panel Question 21, para. 44. See, e.g., EU Response to Arbitration Panel Questions 10 and 21.
33 US Response to Arbitration Panel Question 19(b), para. 35 (emphasis and bold added). See also
ibid., para. 31.
34 Decision by the Arbitration Panel, US – Upland Cotton (Articles 22.6 and 7.10 – US), para. 4.117.
35 See above footnote 28.
36 Decision by the Arbitration Panel, US – Upland Cotton (Articles 22.6 and 7.10 – US), para. 4.117.
37 See above footnote 19.
38 In response to a question by the Arbitration Panel, the European Union also explained that the
presence of adverse effects, if any, after the counterfactual launch dates cannot be the basis to authorise
recurring countermeasures in the same amount for an indefinite period. Diminishing effects weaken and
dissipate with the passage of time, and therefore contradict the premise of the US request for recurring
countermeasures, which assumes that adverse effects remain constant over time (and prohibits testing of that
assumption). The United States argued that the Arbitration Panel has no authority to consider mechanisms
through which adverse effects dissipate over time. EU Response to Arbitration Panel Question 101; US
Response to Arbitration Panel Question 101; EU Comment on US Response to Arbitration Panel Question 101.
39 See e.g., US Response to Arbitration Panel Questions 20, 101; EU Response to Arbitration Panel
Question 101.
40 See, e.g., EU Written Submission, paras. 113-130; EU Responses to Arbitration Panel Questions 10,
21, 56 (Section C), 57, 101, 104, and 147; EU Opening Statement, paras. 48-57.

(c) Third, even when taking the most extreme (and unsupported) US assumption – that
every A380 order and, in addition, every A380 delivery, today amounts to an adverse
effect to the US (and disregarding , for the moment, the wind -down of the A380
programme) – the US assertion of correspondence fails. According to the US approach,
the annual level of A380 orders and deliveries allegedly lost to Boeing between 2016 and
2018 is 47 units. Yet, in reality, the annual total A380 orders and deliveries during that
same time period was only 27 units.41 Thus, even before taking into account the wind -
down of the A380 programme, the United States claims vastly higher adverse effects
than the total number of annual Airbus orders and deliveries.
The United States has not contested that showing.
(d) Fourth, when taking into account the wind-down of the A380 programme, the lack of any
correspondence becomes only starker. With the wind-down of the A380 programme by
2021, there remain a total of [[***]] A380 aircraft to be delivered in 2019-2021, of which
[[***]] are destined for Emirates under the 2013 lost sale. 42 That is, during the 2019 -
2021 period, the annual number of A380 orders and deliveries will be [[***]] aircraft
(without correcting for double-counting), or [[***]] aircraft (when correcting for double-
counting).43 From 2022 onwards, the annual number of A380 orders and deliveries will
be zero.
This evidence further demonstrates the extreme degree to which the US approach, which,
for an indefinite period, results in countermeasures commensurate with an annual
number of 47 A380 orders and deliveries, does not achieve the required correspondence
with "the actual continued adverse effects of the {subsidies} over time".44
Again, the United States has not contested that showing.
26. In sum, while the Parties agree on the legal standard for authorising recurring
countermeasures, the European Union has shown that the United States ' request for
countermeasures does not meet that standard. Specifically, the United States ' request does not
reflect a "reasonable estimation" of "the actual continued adverse effects of the {subsidies} over
time".45 This lack of correspondence should not come as a surprise. The US approach is simply not
designed to ensure correspondence. Rather, the US approach seeks recurring countermeasures that
are permanently fixed by reference to adverse effects determined to exist in the past ( i.e., the
December 2011 to 2013 period), regardless of what is actually happening today, in 2019, and
regardless of what is known will change in the future.46
27. Given that the United States has not contested that showing, there is no basis in law or in
fact for this Arbitration Panel to authorise recurring co untermeasures. Similarly, there is no basis
for the European Union to accept such an award.
28. Moreover, the European Union notes that the untenable US position becomes even more
problematic in light of the recent Appellate Body report in US – Large Civil Aircraft (Article 21.5 –
EU). Recalling its jurisprudence that "effects of a subsidy will ordinarily dissipate over time ", the
Appellate Body found that an adjudicator cannot assume that "the phenomena {of price suppression
and lost sales} manifest themselves to the same degree throughout the time period from order to
delivery".47 Thus, there is no basis for the adjudicator to assume that even later deliveries under
the very same lost sale, and much less under later sales alleged to be lost due to subsidies, constitute
present adverse effects, nor that they do so "to the same degree".48
29. In the present proceeding, the United States asks the Arbitration Panel to do the exact
opposite of what the Appellate Body requires of an adjudicator. That is, the United States asks the
Arbitration Panel to assume, without any further assessment, that adverse effects during the
December 2011 to 2013 period manifest "to the same degree"49 (i.e., are constant) over time, and,

41 This comparison is even before controlling for double-counting or over-counting, as discussed in
Section I.G, below.
42 See EU Response to Arbitration Panel Question 147.
43 EU Response to Arbitration Panel Question 147.
44 Decision by the Arbitration Panel, US – Upland Cotton (Articles 22.6 and 7.10 – US), para. 4.117.
45 Decision by the Arbitration Panel, US – Upland Cotton (Articles 22.6 and 7.10 – US), para. 4.117.
46 US Methodology Paper, paras. 90-94.
47 Appellate Body Report, US – Large Civil Aircraft (Article 21.5 – EU), para. 5.336 (emphasis added).
48 Appellate Body Report, US – Large Civil Aircraft (Article 21.5 – EU), paras. 5.336, 5.340.
49 Appellate Body Report, US – Large Civil Aircraft (Article 21.5 – EU), para. 5.336.

therefore, provide "a reasonable estimation " of "the actual continued adverse effects of the
{subsidies} over time".50 The Appellate Body's jurisprudence confirms that there is simply no basis
in law or fact for the US position, which is that, as a matter of default, the Arbitration Panel must
assume that adverse effects do not dissipate with time, and are the same today as they were during
the December 2011 to 2013 period.
F. The United States errs in arguing that the Arbitration Panel has no authority
to test whether recurring countermeasures reflect a "reasonable
estimation" of the "actual continued adverse effects of the {subsidies} over
time"51
30. As explained above, in its attempt to justify its request for recurring countermeasures, the
United States asserts, without any evidence (and without engaging with the EU's rebuttal evidence),
that the "instances of adverse effects underlying the adopted f indings" are "representative of the
adverse effects LA/MSF subsidies will continue to cause in future years ", and are "the most
reasonable estimation of continued adverse effects over time ".52 The United States thus assumes
that the effects of A380 and A350XWB MSF subsidies do not "diminish",53 or "dissipate",54 over time,
but instead remain constant, such that adverse effects during the December 2011 to 2013 time
period are "representative" of effects over time.
31. At the same time, the United States asserts that the Arbitration Panel has no authority to
test this assertion.55 The United States cannot have its cake and eat it. The European Union is not
aware of any court of law that would accept an assertion that:
(a) The party putting forward the assertion ( i.e., the United States) leaves that assertion
unproven;
(b) The opposing party ( i.e., the European Union) disproved that assertion, without any
rebuttal by the other side (i.e., the United States); and,
(c) The adjudicator (i.e., the Arbitration Panel) is not even allowed to test the assertion –
i.e., to assess in an objective manner the assertion put forward.56
32. The US position is untenable.
33. First, and as the arbitration panel in US – Washing Machines recently confirmed, the task
before this Arbitration Panel is to assess the "reasonableness and plausibility" of the counterfactual
at issue. 57 In these proceedings, that involves testing the counterfactual underpinning the US
assumption that non-recurring subsidy measures cause constant adverse effects over time, based
on the assertion that the A380 and A350XWB would not be available in the mar ket. While the
European Union explained that the Arbitration Panel should coordinate its work with the second
compliance panel, the European Union did not ask the Arbitration Panel also to assess compliance.
Instead, the Arbitration Panel must test the "reasonableness and plausibility " of the US
counterfactual in these proceedings, and in so doing, should rely on recent "credible, factual and
verifiable information",58 including the EU evidence.
34. Second, the fact that the second compliance panel is, to som e extent, looking at the same
evidence for a different purpose – that is, to assess compliance under Article 7.8 of the SCM
Agreement – does not mean that the Arbitration Panel may abdicate its separate and distinct duty,
under Article 7.10 of the SCM Agreement and Article 11 of the DSU, to make an objective assessment
on a key question that, because of the US request for recurring countermeasures, is before the

50 Decision by the Arbitration Panel, US – Upland Cotton (Articles 22.6 and 7.10 – US), para. 4.117.
51 Decision by the Arbitration Panel, US – Upland Cotton (Articles 22.6 and 7.10 – US), para. 4.117.
52 US Response to Arbitration Panel Question 19(b), para. 35 (emphasis added).
53 Appellate Body Report, EC – Large Civil Aircraft (Article 21.5 – US), para. 5.371 (footnote 932); EC –
Large Civil Aircraft, para. 713; US – Large Civil Aircraft (Article 21.5 – EU), footnote 758.
54 See above footnote 28.
55 US Written Submission, paras. 99, 100, 105-107; US Response to Arbitration Panel Questions 18
(paras. 24-27), 22 (para. 49), 103 (paras. 28-29), 101 (paras. 19, 22). See, e.g., EU Framework Response,
paras. 39-50; EU Responses to Arbitration Panel Questions 9, 10, 14, 21, 56, 103; EU Opening Statement,
paras. 53-57.
56 See also EU Response to Arbitration Panel Question 104, paras. 130-131.
57 Decision by the Arbitration Panel, US – Washing Machines (Article 22.6 – US), paras. 1.16, 3.10,
3.11, 3.29.
58 Decisions by the Arbitration Panel, US – 1916 Act (EC) (Article 22.6 – US), para. 5.54; EC –
Hormones (US) (Article 22.6 – EC), para. 41; US – Washing Machines (Article 22.6 – US), para. 1.16.

Arbitration Panel. To support its erroneous request for recurring countermeasures, the United States
asks the Arbitration Panel to make a finding that adverse effects in the December 2011 to 2013
period are a reasonable estimation of adverse effects over time, but denies the Arbitration Panel any
opportunity to test the US assertion on the basis of the evidence. Consistent with its duty to make
an objective assessment of the matter, the Arbitration Panel must test the US assertion in light of
the recent evidence and argument.
35. Third, the European Union recalls that, in prior phases of this dispute, the Appellate Body
faulted the adjudicator for accepting assertions by the United States without "making its own
independent assessment " thereof.59 By simply deferring to the United States, and ignoring EU
evidence and argument, that adjudicator failed to make an objective assessment, under Article 11
of the DSU. Likewise, in the recent report in US – Large Civil Aircraft (Article 21.5 – EU), the
Appellate Body again faulted the adjudicator, in several instances, for its failure "to assess properly
the European Union's evidence" and to "provide a reasoned and adequate explanation for {rejecting
the European Union 's argument}".60 The Arbitration Panel cannot simply disregard the European
Union's evidence and argument, as the United States has consistently asked it to do, and deny its
duty to test the reasonability and plausibility of the US assertions about the relevant
counterfactual.61
36. Fourth, even with recurring subsidies that caused "continued adverse effects" over time, the
arbitration panel in US – Upland Cotton (Articles 22.6 and 7.10 – US) did not simply assume that
past adverse effects provided a "reasonable estimation" of "actual continued adverse effects of the
measure over time" in that particular case.62 Rather, the arbitration panel tested this assertion in
light of the Parties' evidence, including recent evidence.63 The arbitration panel recognised that the
outcome of this inquiry may depend on "a number of economic or other factors that would affect the
evolution over time of the impact of the subsidies at issue".64 Based on an assessment of the parties'
evidence and argument, including recent evidence, the arbitration panel in that case found that the
reference period proposed by Brazil was not "unrepresentative".65 This confirms, all the more, that
this Arbitration Panel cannot authorise recurring countermeasures in response to non -recurring
subsidy measures, much less without similarly testing the US assertion that the December 2011 to
2013 period is representative.
37. Fifth, and finally, the European Union notes that, while the U nited States rejects the
Arbitration Panel's authority to engage with the recent evidence, the United States asserts that "any
'representativeness' inquiry must be with respect to an aspect of the countermeasures calculation
that was not part of, or incorp orated in, the adverse effects determination in the compliance
proceeding".66 The United States offers, as an example, the price of a particular LCA model, which
was "not part of or incorporated in the adverse effects determined to exist ".67 The United States
errs.
38. There is a substantial logical disconnect in the US position that the Arbitration Panel is
allowed to test for representativeness for some limited issues ( e.g., "the price of a particular LCA
model"68), but not for any other issue (e.g., cause-and-effect pathway, sales of A380 aircraft); while
still insisting that recurring countermeasures are appropriate. As the United States agrees, recurring
countermeasures are appropriate only if the adverse effects in the December 2011 to 20 13 period
provide a "reasonable estimation " of "the actual continued adverse effects of the measure over
time".69 Such representativeness cannot be established based on an all-too-convenient assessment

59 Appellate Body Report, EC – Large Civil Aircraft, para. 1128.
60 Appellate Body Report, US – Large Civil Aircraft (Article 21.5 – EU), paras. 5.78, 5.104, 5.116.
61 See, e.g., US Written Submission, paras. 99, 100, 105-107; US Responses to Arbitration Questions
18 (paras. 24-27); 22 (para. 49); 101 (paras. 19, 22); 103 (paras. 28-29). See, e.g., EU Framework
Response, paras. 39-50; EU Responses to Arbitration Panel Questions 9, 10, 14, 21, 56, 103; EU Opening
Statement, paras. 53-57.
62 Decision by the Arbitration Panel, US – Upland Cotton (Articles 22.6 and 7.10 – US), para. 4.117.
63 Decision by the Arbitration Panel, US – Upland Cotton (Articles 22.6 and 7.10 – US), paras. 4.117-
4.118.
64 Decision by the Arbitration Panel, US – Upland Cotton (Articles 22.6 and 7.10 – US), para. 4.117
(emphasis added).
65 Decision by the Arbitration Panel, US – Upland Cotton (Articles 22.6 and 7.10 – US), para. 4.118.
66 US Response to Arbitration Panel Question 103, para. 28 (emphasis added).
67 US Response to Arbitration Panel Question 103, para. 29.
68 US Response to Arbitration Panel Question 103, para. 29.
69 Decision by the Arbitration Panel, US – Upland Cotton (Articles 22.6 and 7.10 – US), para. 4.117.

of a narrow subset of issues ( e.g., "the price of a pa rticular LCA model "), while ignoring all other
issues.70
39. To give a concrete example, according to the United States, adverse effects in the VLA
market determined to exist in December 2011 to 2013 are "representative of the adverse effects
LA/MSF subsidies will continue to cause in future years".71 The United States seems to accept that,
in testing this proposition, the Arbitration Panel is allowed to test if the price of the A380 in December
2011 to 2013 is similar to the price today, but the Arbitration Panel is not allowed to test if the A380
is still sold today, and to a similar degree. According to the United States ' logic, the Arbitration
Panel must accept representativeness in the VLA market if the price of the A380 has not changed,
even though the average annual number of A380 orders and deliveries is vastly lower today than in
the December 2011 to 2013 period, and the A380 programme is winding-down.72
40. Moreover, the inquiry into "representativeness" set out by the arbitration panel in US –
Upland Cotton (Articles 22.6 and 7.10 – US) was considerably more comprehensive than what the
United States inaccurately asserts. If that arbitration panel had adopted the narrow inquiry into
"representativeness" proposed by the United States, it simply could not have tested for
representativeness in the way it actually did. In testing representativeness, that arbitration panel
did consider an "aspect" – i.e., the world price of cotton – "that was part of, or incorporated in, the
adverse effects determination in the compliance proceeding".73
41. Thus, if the United States insists that recurring countermeasures are appropriate, it must
logically accept that the inquiry into "representativeness" cannot be confined to a s elf-selected,
limited and biased subset of issues designed to favour the United States' position.
G. The US request for recurring countermeasures results in improper double -
counting and over-counting
42. The US request for recurring countermeasures is unwarranted for at least two other reasons.
First, the US request to multiply past adverse effects into the present and the future will lead to
improper double-counting. The US approach counts a transaction once as a lost sale in the year an
order is made and, again, when the delivery actually occurs several years after the order, as part of
the exercise of quantifying impedance.
43. The United States submits that, because its approach values "non-overlapping instances of
adverse effects" during the December 2011 to 2013 period, "utilizing this figure for future years in
which countermeasures will be applied " does not risk double -counting.74 The US reasoning is
erroneous, and shows a misunderstanding of the concept of double-counting. The US approach risks
double-counting, because it assumes an equal number of instances of lost sales and impedance
occurring for an indefinite period of time. However, the lost sale of today is necessarily the
impedance of tomorrow, and under the US approach, the same transaction will therefore be counted
twice.
44. The European Union illustrates this by reference to the unsupported US assumption that
every A380 order today and, in addition, every A380 delivery today, amounts to adverse effects.75
Under the US approach, "non-overlapping instances of adverse effects" during the period December
2011 to 2013 related to the A380 result in double -counting when used as the basis for recurring
countermeasures. The European Union demonstrated that the United States is counting the very
same transactions twice: once as a lost sale during the December 2011 to 2013 period, and again
when the delivery actually occurred. As a result, improper double -counting distorts the alleged
correspondence between the requested recurring countermeasures and the adverse effects
determined to exist.
45. Second, the United States ' mixing of an order -centric metric for lost sales and a delivery -
centric metric for impedance during the same reference period improperly inflates the alleged level
of adverse effects and leads to over-counting. Any method for quantifying adverse effects must be

70 US Response to Arbitration Panel Question 103, para. 29.
71 US Response to Arbitration Panel Question 19(b), para. 35 (emphasis added). See also US Written
Submission, paras. 82, 137, 139, 260; US Response to Arbitration Panel Question 19(a), para. 28; US
Response to Arbitration Panel Question 19(b), para. 38; US Response to Arbitration Panel Question 20, para.
37; US Opening Statement, para. 37.
72 See, e.g., EU Response to Arbitration Panel Question 147.
73 US Response to Arbitration Panel Question 103, para. 28 (emphasis added).
74 US Response to Arbitration Panel Question 69, para. 43 (emphasis added).
75 EU Response to Arbitration Panel Question 57.

consistent, and use a single metric; a quantification for the same period cannot mix an order-centric
metric and a delivery -centric metric. Just as the United States would be wrong to calc ulate a
company's turnover by mixing both an order -centric valuation and a delivery -centric valuation for
sales and deliveries occurring in the same year, the United States errs in quantifying both lost sales
and deliveries during the reference period in q uestion. Doing so misallocates economic harm from
a temporal perspective, and necessarily results in over-counting.
H. To authorise recurring countermeasures, the Arbitration Panel is required
to coordinate with the second compliance panel
46. In the European Union's preliminary ruling request, the European Union explained that the
Arbitration Panel should coordinate with the parallel second compliance proceeding, because, to the
extent that the second compliance panel confirms that the European Union has achieved compliance,
the Arbitration Panel could not award any countermeasures to the United States.76
47. Moreover, there is an additional and distinct need for coordination, which results from the
United States' unwarranted request for recurring countermeasures. The potential consequences of
any failure to co-ordinate are exacerbated by the US request for recurring countermeasures, which,
one way or another, would require the Arbitration Panel to make findings about present adverse
effects, if any. If, on the other hand, the Arbitration Panel authorises non-recurring countermeasures
(based on the findings related to the December 2011 to 2013 period), as it must, it would avoid this
risk altogether.
48. The risk of conflicting findings is a particular feature of p roceedings under Part III of the
SCM Agreement.77 An arbitration panel in the context of Part III does not have exclusive jurisdiction
with respect to the existence (or non -existence) of adverse effects. These are also issues that will
be considered by original and compliance panels. Therefore, when parallel compliance proceedings
take place, the compliance panel will likewise make findings about present adverse effects, if any.
As a result, there is a unique interdependence between the present arbitration panel proceedings
and the parallel second compliance proceedings in the context of proceedings under Part III of the
SCM Agreement – a connection that was not present in other disputes, such as US – Tuna II (Mexico)
(Article 22.6 – US).
49. The United States disagrees that this interdependence is unique to Pa rt III of the SCM
Agreement. With reference to Article III of the GATT 1994, the United States submits that
demonstrating trade effects is also required outside of Part III of the SCM Agreement.78 The United
States errs. The Appellate Body in Brazil – Taxation recently confirmed that the requirement to
show adverse effects distinguishes the disciplines on actionable subsidies from other disciplines
under the covered agreements.79 Because trade effects "pervade{}"80 the disciplines on actionable
subsidies, they create a unique need for coordination between the Arbitration Panel and the second
compliance panel.
IV. THE UNITED STATES ERRS IN REJECTING THE RELEVANCE OF "TRADE EFFECTS" TO
QUANTIFY THE VALUE OF ADVERSE EFFECTS
A. The Arbitration Panel should focus on a "trade effects" metric to quantify
the value of adverse effects determined to exist
50. In addition to the fundamental errors in the US request for recurring countermeasures, there
are numerous additional errors in the US approach. In particular, the Unite d States erroneously
objects to the proper metric for quantifying countermeasures, i.e., actual trade effects as they arise
when aircraft are actually delivered, and argues for the use of sales and resulting anticipated
deliveries.
51. Curiously, the Parties agree that, in the present dispute and as a factual matter, trade effects
arise at the moment of actual delivery of an aircraft, and not at the moment the order is placed,
several years earlier.81,82 However, the United States asserts that the Arbitration Panel must ignore

76 See the European Union's request for preliminary ruling, 15 October 2018.
77 Decision by the Arbitration Panel, US – Upland Cotton (Articles 22.6 and 7.10 – US), para. 4.117.
78 US Written Submission, para. 52.
81 See, e.g., US Response to Panel Question 53, paras. 3-5.
82 See also Panel Report, US – Large Civil Aircraft, para. 7.1685.

"trade effects", as they actually arise, in determining whether the countermeasures requested by
the United States are "commensurate" with the adverse effects determined to exit.83
52. Specifically, the United States asks the Arbitration Panel to ignore how the specific adverse
effects in December 2011 to 2013 have resulted in actual trade effects over time. That is, the United
States asks the Arbitration Panel: (i) to ignore the pace of deliveries over time; (ii) to ignore that a
number of deliveries pursuant to the "precise findings" of adverse effects have already occurred ;
and, (iii) to ignore even the fact that some deliveries will never occur (such as the Transaero Airlines
order).84
53. The United States errs. The US assertion that the Arbitration Panel must look "simply" at
adverse effects does not answer how the Arbitration Panel is to calibrate and quantify those adverse
effects. Rather, the Arbitration Panel must choose a relevant and appropriate metric to quantify and
calibrate the value of adverse effects determined to exist – i.e., trade effects. As the arbitration
panel in US – Washing Machines recently confirmed, past arbitration panels have typically used trade
effects as the metric to perform their task and this Arbitration Panel should do the same.85
54. The United States also entirely ignores that, in the only prior arbitration panel under Article
7.10 of the SCM Agreement, the arbitration panel did precisely what the United States considers
"unnecessary and inappropriate ".86 That is, the arbitration panel in US – Upland Cotton (Articles
22.6 and 7.10 – US) used trade effects as the metric to quantify the value of adverse effects
determined to exist.87 The Arbitration Panel in these proceedings should similarly use a trade effects
metric.
B. The Arbitration Panel should quantify adverse effects determined to exist
on a prospective basis, considering present and outstanding deliveries
55. An arbitration panel must ensure that it authorises solely those countermeasures that are
"prospective" in nature,88 and that countermeasures authorised are not "in excess of the benefits
that are nullified or impaired ".89 In the circumstances of the United States ' static approach, the
quantification and calibration of countermeasures must, therefore, focus on present and outstanding
trade effects.
56. However, the United States considers that deliveries that have occurred in the past must be
taken into account, even though the related trade effects have happened in the past. To support its
position, the United States essentially recycles the same flawed arguments it put forward to defend
its request for recurring countermea sures. The United States argues that, in quantifying adverse
effects determined to exist in the December 2011 to 2013 period, the fact that some of those adverse
effects have subsequently ceased to exist is irrelevant.90
57. The European Union has explained at length that the Dispute Settlement Body ("DSB") made
no findings with respect to the existence, let alone the degree, of "annual" adverse effects, including
in 2019 or any other subsequent year. The prior findings relate only to adverse effects in the
December 2011 to 2013 period. 91 The United States itself concedes that the adopted findings
"consist" of specific instances of adverse effects, each during December 2011 to 2013.92 No findings
exist that would support the view that similar adverse effects oc cur today, six to eight years later,

83 See, e.g., US Written Submission, para. 135. See also US Response to Arbitration Panel Question 54.
84 See, e.g., US Response to Arbitration Panel Questions 54 (paras. 7-10); 58 (para. 16).
85 See, e.g., Decision by the Arbitration Panel, US – Washing Machines (Article 22.6 – US), para. 3.7
(footnote 40).
86 US Response to Arbitration Panel Question 94, para. 4.
87 See Decision by the Arbitration Panel, US – Upland Cotton (Articles 22.6 and 7.10 – US), paras.
4.193, 4.194.
88 Appellate Body Report, EC – Large Civil Aircraft (Article 21.5 – US), para. 5.374 (emphasis in
original).
89 Decision by the Arbitration Panel, US – Washing Machines (Article 22.6 – US), paras. 3.11, 3.22. See
also Decision by Arbitration Panel, US – Gambling (Article 22.6 – US), paras. 3.27, 3.30.
90 US Written Submission, para. 137.
91 See, e.g., EU Framework Response, paras. 24-31; EU Responses to Arbitration Panel Questions 4, 8,
10, 11, 12, 14, 5, 56.
92 US Methodology Paper, para. 29.

or will occur in the future. Moreover, the European Union has affirmatively shown that adverse
effects are not present today.93 The United States has refused to engage with this evidence.
58. Therefore, to determine "commensurate" countermeasures that are prospective in nature,
the Arbitration Panel must calibrate the level of countermeasures to present and outstanding
deliveries that result from the precise findings of adverse effects made.
V. COUNTERMEASURES SHOU LD BE COM MENSURATE WITH THE A DVERSE EFFECTS
DETERMINED TO EXIST IN EACH PRODUCT MARKET
59. The Parties agree that the Arbitration Panel is permitted to determine, separately for each
product market, a level of countermeasures corresponding to the degree of adverse effe cts
determined to exist. 94 As the United States observes, correctly, "the U.S. methodology makes it
easy to discern what portion of the countermeasures corresponds to the adverse effects in each of
the respective product markets".95 The Unites States disagrees, however, that, in the circumstances
of this dispute, the Arbitration Panel should exercise its discretion and award separate amounts for
each product market. The United States errs.
60. First, under Article 7.10 of the SCM Agreement, an arbitration panel must determine a level
of countermeasures that bears "a relationship of correspondence" with the precisely defined second
element, namely, "the degree and nature of the adverse effects determined to exist ".96 As the
United States agrees, the "precise findings"97 in the first compliance proceedings concern separate
product markets, resulting in separate findings of inconsistency for each product market.98 Those
separate findings also concern different types of adverse effects for the two product markets. 99 It
follows that the need to make a separate determination for each product market is not, as the United
States asserts, an "additional requirement" for which there is no textual support in Article 7.10 of
the SCM Agreement.100 Rather, in the circumstances of the present case, the Arbitration Panel
should do so as part and parcel of its obligation to ensure "a relationship of correspondence" with
the "precise findings"101 of adverse effects determined to exist in the first compliance proceedings.102
61. Second, the United States ignores that arbitration panels have determined countermeasures
separately for different product markets and types of inconsistency, 103 or even depen ding on
uniquely identifiable instances of WTO-inconsistency.104 In US – Washing Machines, the arbitration
panel accepted the United States' request that it determine separately the amounts of suspension
for the anti -dumping and countervailing duty measures. The arbitration panel did so, and found
that, in the circumstances of that case, a "single awarded amount … would risk a result contrary to
the DSU".105 Awarding separate amounts, instead, was considered: (i) to be consistent with Article
22.8 of the DSU, which requires suspension to be "temporary"; (ii) to "maintain equivalence"; (iii)
to "provide guidance to the parties on the authority to suspend and the obligation to comply"; and,
(iv) "may limit the need for future recourse to dispute settlement proceedings".106
62. These same considerations apply in the present dispute, and mean that the Arbitration Panel
should exercise its discretion an d award separate amounts for each of the respective product
markets. The "adverse effects determined to exist " in the first compliance proceedings consist of
two separate sets of inconsistencies, one in the VLA market, which includes the A380, and another
in the twin-aisle market, which includes the A350XWB. The European Union has taken distinct steps

93 See EU Response to Arbitration Panel Question 4, paras. 119-123. See also EU First Written
Submission in EC – Large Civil Aircraft (Article 21.5 II – EC), October 2018, (Exhibit EU-A-BCI), Sections
V.B.4.d, V.B.5.e, especially para. 343.
94 US Response to Arbitration Panel Question 102, para. 25.
95 US Response to Arbitration Panel Question 102, para. 25.
96 Decision by the Arbitration Panel, US – Upland Cotton (Articles 22.6 and 7.10 – US), para. 4.39
(emphasis in original).
97 Decision by the Arbitration Panel, US – Upland Cotton (Articles 22.6 and 7.10 – US), para. 4.49.
98 US Response to Arbitration Panel Question 102, para. 25.
99 US Response to Arbitration Panel Question 102, para. 25.
100 US Response to Arbitration Panel Question 102, para. 23.
102 Decision by the Arbitration Panel, US – Upland Cotton (Articles 22.6 and 7.10 – US), paras. 4.39,
4.49.
103 See, e.g., Decision by the Arbitration Panel, US – COOL (Article 22.6 – US), paras. 6.78-6.79;
Decision by the Arbitration Panel, US – Byrd Amendment (EC) (Article 22.6 – US), para. 3.121; Decision by the
Arbitration Panel, EU – Hormones (US) (Article 22.6 – EC), paras. 65, 78.
104 Decision by the Arbitration Panel, US – 1916 Act (Article 22.6 – US), paras. 6.14, 6.17.
105 Decision by the Arbitration Panel, US – Washing Machines (Article 22.6 – US), para. 3.5.
106 Decision by the Arbitration Panel, US – Washing Machines (Article 22.6 – US), para. 3.5.

to ensure compliance in each product market. 107 The European Union fully expects that, in the
parallel second compliance proceedings, the second compliance p anel will find that the European
Union has fully complied with its obligations under Article 7.8 of the SCM Agreement. However, to
the extent the second compliance panel were to find that the European Union has complied with only
one or the other inconsis tency in one or the other product market, the level of countermeasures
must be reduced accordingly to "maintain {correspondence}" and ensure that countermeasures are
"temporary".108 Therefore, to paraphrase the arbitration panel in US – Washing Machines ,
"separating the amounts of suspension would resolve potential ambiguities on the level of
suspension, following an Article 21.5 determination, and diminish the need for future
proceedings".109 Such an approach is readily available, and allows the Arbitration Panel to greatly
improve the clarity of its findings, while complying with the requirement to "maintain
{correspondence}" and to ensure that countermeasures are "temporary".110
VI. THE US APPROAC H TO QUANTIFYING THE DEGREE OF LOST SALE S DETERMINED
TO EXIST IS FLAWED
63. The US approach to valuing "lost sales" contains numerous further errors. While the Parties
agree on the identity of the specific lost sales determined to exist – that is, five specific lost sales,
and not others, each during the December 2011 to 2013 period – the Parties disagree on how to
quantify these lost sales.
64. The US approach to quantifying the level of adverse effects from the five lost sales at issue
consists of determining the "present value " of orders counterfactually won by Boeing in the
December 2011 to 2013 period. The United States implements this "valuation of lost sales "111
approach by combining (i) Airbus delivery schedules – as (ii) estimated by Boeing employees
pretending to assume a 2011 to 2013 perspective 112 – with (iii) Boeing prices (taken from
"comparator orders" that are allegedly similar to the lost sales at issue), and (iv) bringing back (i.e.,
discounting) expected delivery revenues using a risk -free US-Government discount rate (the 10 -
year T-Bond yield rate).113 There is an obvious inconsistency in the US attempt to combine – in one
calculation – estimates of Airbus delivery schedules with actual Boeing prices and a risk -free US
Government discount rate.114
65. In addition, the United States committed numerous, and consequential, technical errors in
implementing its approach. 115 Here, the European Union focuses on one conceptual error that
permeates the US valuation of lost sales, namely the United States ' inconsistent and erroneous
position concerning evidence post-dating the December 2011 to 2013 period.
66. On the one hand, the United States submits that the Arbitration Panel is not allowed to
consider any evidence speaking to the period after December 2013, and that the Arbitration Panel
is precluded from considering: (i) the cancellation of the Transaero A380 order in 2015;116 (ii) actual
delivery schedules; 117 and, (iii) certain escalation rates. 118 The United States argues that the
Arbitration Panel must base its work "on the same evidence that {was before the first compliance
panel and} formed the basis of the significant lost sales determination ".119 The United States also
asserts that there is a general "preference for verifiable facts over unverifiable speculation".120

107 See, e.g., WT/DS316/34.
108 Decision by the Arbitration Panel, US – Washing Machines (Article 22.6 – US), para. 3.5.
109 Decision by the Arbitration Panel, US – Washing Machines (Article 22.6 – US), para 3.5 (footnote
38).
110 Decision by the Arbitration Panel, US – Washing Machines (Article 22.6 – US), para. 3.5.
111 See, e.g., US Methodology Paper, para. 31.
112 See US Response to Arbitration Panel Question 70.
113 See EU Written Submission, paras. 33-34, 207.
114 See, e.g., EU Written Submission, paras. 223, 275; EU Response to Arbitration Panel Question 80,
paras. 284-285.
115 See, e.g., EU Written Submission, paras. 207-290, 353-373; EU Opening Statement, paras. 83-91,
102-111; EU Responses to Arbitration Panel Questions 31, 40, 41, 42, 43, 48, 49, 52, 54, 60(c), 63, 64, 65,
67, 68, 77, 78, 79, 80, 91, 95, 96, 97, 105, 106, 110, 112, 148, 161, 162, 164, 165, 166; EU Comments on
US Responses to Arbitration Panel Questions 93, 94, 100, 110, 112, 115, 117, 118, 120, 121, 125, 126, 134,
135, 136.
116 US Response to Arbitration Panel Question 58, para. 16.
117 US Response to Arbitration Panel Question 58, paras. 17-19.
118 US Written Submission, paras. 186-190; US Response to Panel Question 70.
119 US Response to Arbitration Panel Question 58, para. 14.
120 US Response to Arbitration Panel Question 58, para. 13 (underlining added).

67. On the other hand, the United States submits that the Arbitration Panel is allowed – and
even required – to consider evidence from the post -2013 period, including: (i) the Producer Price
Index ("PPI");121 (ii) Boeing's cancellation rate (if any is applied);122 (iii) certain "comparator orders"
with which to compare the lost sales; 123 and, (iv) the existence of the 747-8I during the years
countermeasures will be applied.124 The United States justifies these evidentiary requirements with
the need to address inevitable "uncertainty" in the quantification exercise. 125 It also asserts that
the post-2013 evidence it introduced is permissible because it "was introduced in this arbitration as
relevant … and not related to the underlying adverse effects determination".126
68. The United States attempts to explain away the evident contradictions in its position by
arguing that "uncertainty is not speculation ".127 Thus, it seems that, for the United States,
uncertainty is just a normal and acceptable state of affairs that results from US assertions that are
unsupported by any valid legal argument or prior finding, and that are unsupported by evidence. At
the same time, for the United States, "speculation" arises whenever the European Union asks the
Arbitration Panel to consider the actual facts and evidence pertaining to the real world; in that
circumstance, the United States asserts that the Arbitration Panel is precluded from looking at the
evidence. The distinction posited by the United States amounts to the denial of an objective, even-
handed assessment of the matter. The United States ' attempt to discredit the use of the freshe st,
most contemporary data as "speculation", while at the same time promoting its own use of post -
2013 data as a mere attempt to reckon with "uncertainty", must fail. The only "principle" on which
the US position rests is whether or not excluding post -2013 evidence serves its interests by
artificially inflating the adverse effects determined to exist.
69. As a matter of law, there is no temporal constraint on any evidence that the Arbitration Panel
may consider in valuing the lost sales findings. 128 In arbitration proceedings, a new factual record
is built, based on new evidence and arguments by the parties regarding the quantification of adverse
effects determined to exist. This new factual record enables an arbitration panel to fulfil its mandate
to determine, on an objective basis, a commensurate level of countermeasures. Moreover, the
Arbitration Panel is duty -bound to make an objective assessment of the Parties ' evidence and
argument. An arbitration panel must consider "all the evidence",129 including recent evidence, in an
even-handed manner.130
VII. THE US APPROACH TO Q UANTIFYING THE DEGRE E OF IMPEDANCE DETER MINED
TO EXIST IS FLAWED
70. With respect to quantifying the level of adverse effects fro m impedance, the United States
simply assumes – without evidence or basis in the findings in the first compliance proceedings – that
all A380 deliveries in the six markets at issue would have been replaced one -for-one by 747 -8Is.
According to the United States, this would have afforded Boeing a 100 percent market share in all
six VLA markets at issue, with each assumed to be equally large in the counterfactual as in reality.131
These assumptions are baseless.
71. The United States simply assumes that, absent A380MSF and A350XWB MSF subsidies, the
A380 and the A350XWB would not have been present in the market today, or in the undefined future
over which the United States seeks countermeasures . However, the original and first compliance
panels did not determine when the aircraft would have been launched absent subsidisation. Neither
the original panel nor the first compliance panel found that the A380 and the A350XWB would not
have been launched by 2011-2013; nor did they find that the aircraft would not have been launched
as of today; and they certainly did not find that the aircraft would never be launched in the future.
Instead, the European Union has demonstrated, employing the approach advocated by the United
States in the first compliance proceedings, that both the A380 and the A350XWB would have

121 US Methodology Paper, para. 94.
122 US Response to Arbitration Panel Question 73, para. 87.
123 US Methodology Paper, para. 73.
124 US Written Submission, para. 239.
125 US Response to Panel Arbitration Question 58, para. 13 (underlining added).
126 US Response to Panel Arbitration Question 58, para. 17.
127 US Response to Panel Arbitration Question 58, para. 13.
128 See, e.g., EU Response to Arbitration Panel Question 40, para. 450.
129 See, e.g., Appellate Body Reports, Brazil – Retreated Tyres, para. 185; EC – Hormones, para. 133;
130 Decision by the Arbitration Panel, US – Upland Cotton (Articles 22.6 and 7.10 – US), para. 4.118.
131 See, e.g., US Written Submission, para. 173.

counterfactually come into existence, absent MSF subsidies, soon after their actual launch, and in
any event, well in advance of any period relevant to the assessment of this Arbitration Panel.132
72. The US assumption of a 747 -8I-only scenario further ignores important demand -side and
supply-side factors, and the interaction of those factors. Specifically, faced with delayed deliveries
of the A380, as well as with delayed deliveries and production bottlenecks of the 747-8I, customers
might have reacted in a number of different ways, including: (i) deferring purchase of A380s to a
time as and when they become available; (ii) substituting A380s for 747-8Is (as and when the latter
become available); (iii) selecting alternative Airbus twin -aisle aircraft; (iv) selecting alternative
Boeing twin-aisle aircraft, such as the 777 -300ER; (v) purchasing VLA or twin -aisle aircraft on the
second-hand market; and, (vi) leasing, rather than purchasing, aircraft.133 These options must be
included – and examined – in any assessment of a counterfactual world in which the subsidised
element of the MSF loans at issue is absent. They cannot be assumed away. The exact market
outcome is dependent on consumer -specific behaviour and preferences, the availability of aircraft
models, and the competitive dynamic s between Airbus and Boeing, including prices offered in the
counterfactual world.134
73. The United States has failed to support its assertions regarding the degree of impedance in
the counterfactual with a proper, robust modelling exercise based on the freshes t, most recently
available data and evidence.135 Such a quantification and calibration exercise would have replaced
the US conjectures with a proper facts-based assessment, rooted in elementary economics.
74. In this respect, the European Union notes that it has established that the 747-8I was only
available for delivery after April 2012, and that deliveries of 47 additional 747 -8Is during the
December 2011 to 2013 period would have caused substantial production bottlenecks for Boeing,
and ensuing delays. 136 In response, the United States amended its previous position, by simply
assuming that, in the absence of the 747-8Is, LCA customers would then have substituted all A380s
for 777 -300ERs or 747 -400s in all six geographic markets at issue. 137 Unsurprisingly, this
assumption is yet again unsupported by compliance findings or evidence, as even the United States
acknowledges.138
75. Moreover, the European Union also established 139 – and the United States has
acknowledged140 – that Boeing would not have been able to deliver 47 additional 747-8Is during the
December 2011 to 2013 period. That is, deliveries of 747 -8I would either never occur, because
other alternatives would have been more attractive, or would occur in 2014, or thereafter. In valuing
the degree of impedance, the Arbitration Panel should not include Boeing 's counterfactual delivery
positions falling outside the December 2011 to 2013 reference period. Those delivery positions
were, by definition, not covered by the "precise"141 findings of impedance in the first compliance
proceedings.
76. For these reasons, the A rbitration Panel should reject the degree of impedance posited by
the United States.
VIII. THE BELATED SUBMISSI ON OF PRIMARY EVIDEN CE BY THE UNITED STA TES
PREJUDICES THE EUROPEAN UNION'S DUE PROCESS RIGHTS
77. Finally, the European Union recalls that, throughout the proceedings, the European Union
repeatedly observed that the United States had failed to provide verifiable primary-source evidence
and documents for its factual assertions. The European Union also demonstrated the importance of
carefully assessing the v eracity and authenticity of the United Sates ' factual assertions . The

132 See above footnote 19.
(para. 302).
134 EU Written Submission, para. 200; EU Response to Arbitration Panel Question 84.
135 See EU Written Submission, paras. 200-203, 296-299; EU Response to Arbitration Panel Questions 3
(paras. 214-215) ; 65 (para. 223); 84 (paras. 309-310); 88 (paras. 326-327).
136 See EU Written Submission, paras. 300-305; EU Response to Arbitration Panel Questions 6, 64, 84,
85, and 88.
138 See US Response to Arbitration Panel Question 87, para. 121.
139 EU Comment on US Responses to Arbitration Panel Questions 114, 144; EU Response to Arbitration
Panel Question 146.
140 US Response to Arbitration Panel Question 114, para. 48 (citing Exhibit USA-64 (BCI)).
141 US Methodology Paper, para. 25.

European Union discovered, for example, that eight out of 12 Boeing 747 -8I deliveries included in
the 747-8I "global average delivery prices " for the 2012 impedance valuation were made to non-
commercial VIP customers at prices [[***]] airline pricing.142 The United States conceded that the
inclusion of VIP prices was improper,143 and adjusted its assessment [[***]] of USD [[***]].144,145
78. Despite the importance of verifying the US assertions, only in the final stage of these
proceedings, and upon explicit request by the Arbitration Panel in its Third Set of Questions, did the
United States provide support for numerous factual assertions tha t it made as far back as its
Methodology Paper, and that it should have addressed much earlier in the proceedings, specifically
in its Methodology Paper. In response to specific Questions by the Arbitration Panel, the United
States finally provided some pr imary-source evidence and documentation, covering 45 new
exhibits,146 running to 2,033 pages of HSBI material and 22 pages of non-HSBI material.
79. The US approach to backloading evidence has compromised the European Union 's due
process right to a meaningful opportunity to answer the case put to it by the United States. Rather
than having multiple opportunities over a series of months to address the key evidence in these
proceedings, the United States ' decision to withhold the evidence until the end of the pr oceedings
resulted in one opportunity for the European Union to review the evidence and to comment, and,
additionally, in a compressed time period of just over three weeks that was complicated by
overlapping deadlines imposed by the Arbitration Panel.
80. The United States ' conduct also undermines the Arbitration Panel 's ability to make an
objective assessment of the matter before it, consistent with its obligation under Article 11 of the
DSU. A proper objective assessment requires an exchange between the pa rties, and between the
parties and the adjudicator. 147 The United States ' decision to withhold information until this late
stage of the proceedings renders that feature of a proper objective assessment impossible.

Arbitration Panel Question 116, para. 57); (ii) a switch from pricing information contained in "Delivery
Invoices" to pricing information contained in "Purchase Agreements", thereby artificially inflating LCA gross
prices and deflating Boeing price concessions (US Response to Arbitration Panel Question 135, para. 156(i) and
footnotes 139, 147, 149, 153, and 198; EU Comment on US Responss to Arbitration Panel Question 135,
paras. 360, 362, 363, 364); and, (iii) a switch from "average final net revenue" data at the time of delivery to
net base-year prices at the time of order (adjusted for price concessions and escalated) for the purposes of
artificially inflating the amount of the United States' impedance claims (US Response to Arbitration Panel
Question 153, para. 7; EU Comment on US Responses to Arbitration Panel Question 153, paras. 7-16).
146 Compare this with the US Methodology Paper, which was accompanied by only 22 exhibits.
147 See, e.g., Appellate Body Report, US — Tuna II (Article 21.5 – Mexico), para. 7.177; Appellate Body
Report, Thailand – Cigarettes (Philippines), para. 150; Appellate Body Report, US – Continued Zeroing, para.
347; Appellate Body Report US – Large Civil Aircraft (2nd complaint), para. 1137 (footnote 2323).

ANNEX C
DECISION OF THE ARBITRATOR CONCERNING THE EUROPEAN UNION'S PRELIMINARY RULING
REQUEST
Contents Page
Annex C-1 Communication from the Arbitrator Preliminary Ruling (Conclusion) 49

ANNEX C-1
COMMUNICATION FROM THE ARBITRATOR
PRELIMINARY RULING
(CONCLUSION)
18 February 2019

1.1. Pursuant to the Arbitrator's letter to the parties of 29 October 2018, and the announcement at
the meeting of the Arbitrator with the parties, the Arbitrator is issuing today its conclusion in respect
of the preliminary ruling requested by the European Union of 15 October 2018. The reasons
supporting this conclusion will, in the interest of efficiency of proceedings, be provided at the end of
the proceedings in the Arbitrator's decision. This conclusion and the reasons supporting it will form
an integral part of the Arbitrator's decision in this matter.
1.2. The Arbitrator has carefully considered the issue raised by the European Union's request of 15
October 2018 for a preliminary ruling and the parties' relevant arguments and evidence contained
or referenced, inter alia, in: (i) the European Union's preliminary ruling request of 15 October 2018,
(ii) the European Union's letter of 22 October 2018, (iii) the United States' letter of 25 October 2018,
(iv) the United States' written submission of 9 November 2018 and (v) the European Union's
response to the Arbitrator's question No. 50 of 16 November 2018.
1.3. The Arbitrator has concluded that, contrary to the European Union 's view, it is neither
necessary nor appropriate for it to "await[] the outcome of the second compliance proceedings
before proceeding to determine the level of countermeasures, if any, legitimately due the United
States".1 In the light of this, the Arbitrator declines the European Union's request that it coordinate
its work with the second compliance panel and wait for the outcome of the second compliance
proceedings, which may include appellate review proceedings, before determining whether the
countermeasures proposed by the United States are commensurate with the degree and nature of
the adverse effects determined to exist.
1.4. Consistent with this conclusion, the Arbitrator will proceed with its work and looks forward to
receiving the parties' replies to its forthcoming questions.