UNITED STATES – CONDITIONAL TAX INCENTIVES FOR LARGE CIVIL AIRCRAFT NOTIFICATION OF AN OTHER APPEAL BY THE EUROPEAN UNION UNDER ARTICLE 16.4 AND ARTICLE 17 OF THE UNDERSTANDING ON RULES AND PROCEDURES GOVERNING THE SETTLEMENT OF DISPUTES (DSU), AND UNDER RULE 20(1) OF THE WORKING PROCEDURES FOR APPELLATE REVIEW
Document: AND PROCEDURES GOVERNING THE SETTLEMENT OF DISPUTES (DSU), AND UNDER RULE 20(1) OF THE WORKING PROCEDURES FOR APPELLATE REVIEW
Date: 20 February 2017
Document codes: WT/DS487/7
Complainant: EU
Respondent: U.S.
Third parties: Brazil, China, India, Japan, South Korea, Russia, Australia, Canada
Dispute stage: Appellate Body
Agreements cited: Art. 1, 2, 1.1(a)(1)(ii), 1.1(b), 2.3, 3.1(b), 3.2, 4.7  Subsidies and Countervailing Measures (SCM)

UNITED STATES – CONDITIONAL TAX INCENTIVES
FOR LARGE CIVIL AIRCRAFT
NOTIFICATION OF AN OTHER APPEAL BY THE EUROPEAN UNION
UNDER ARTICLE 16.4 AND ARTICLE 17 OF THE UNDERSTANDING ON RULES
AND PROCEDURES GOVERNING THE SETTLEMENT OF DISPUTES (DSU),
AND UNDER RULE 20(1) OF THE WORKING PROCEDURES FOR APPELLATE REVIEW
The following communication, dated 17 January 2017, from the delegation of the European Union,
is being circulated to Members.

Pursuant to Articles 16.4 and 17.1 of the DSU and Art icle 4.8 of the SCM Agreement , the
European Union hereby notifies to the Dispute Settlement Body its decision to appeal to the
Appellate Body certain issues of law covered in the Panel Report and certain legal interpretations
developed by the Panel in the dispute United States – Conditional Tax Incentives for Large Civil
Aircraft (WT/DS487). Pursuant to Rule 23(1) of the Working Procedures for Appellate Review , the
European Union simultaneously files this Notice of Other Appeal with the Appellate Body
Secretariat.

For the reasons to be further elaborated in its submissions to the Appellate Body, the
European Union appeals, and requests the Appellate Body to reverse, modify or declare moot and
of no legal effect, the findings, conclusions and recommendations of the Panel, with respect to the
following errors of law and legal interpretations contained in the Panel Report1:

1. The Panel erred in the interpretation of Article 3.1(b) of the SCM Agreement by requiring the
complaining Member to demonstrate that the m easure at issue "per se and necessarily
exclude{s}" the use of imported goods, and on that basis, finding that the First Siting
Provision,2 set out in Section 2 of Washington State Engrossed Substitute Senate Bill 5952
("ESSB 5952"), does not make the subs idies subject to that condition de jure contingent on
the use of domestic over imported goods.3
2. The Panel erred in the application of Article 3.1(b) of the SCM Agreement in finding that the
First Siting Provision does not make the subsidies subject to that condition4 de jure
contingent on the use of domestic over imported goods.5

1 Paragraph numbers provided in footnotes to the following description of the Panel's errors are
intended to indicate the primary instance of the errors.
2 See Panel Report, paras. 7.28-7.30 (defining "First Siting Provision").
3 Panel Report, paras. 7.290, 7.291, 7.294, 7.296, 7.297, 8.1(1)(b)(i). The subsidies subject to the First
Siting Provision are the following: (a) reduced business and occupation (B&O) tax rate for the manufacture and
sale of commercial airplanes; (b) B&O tax credit for pre-production development for commercial airplanes and
components; (c) B&O tax credit for property taxes on commercial airplane manufacturing facilities;
(d) exemption from sales and use taxes for certain computer hardware, software, and peripherals; (e)
exemption from sales and use taxes for certain construction services and materials; (f) exemption from
leasehold excise taxes on port district facilities used to manufacture superefficient airplanes; and (g)
exemption from property taxes for the personal property of port district lessees used to manufacture
superefficient airplanes. See Panel Report, paras. 7.15, 7.28.
4 See footnote 3, above.
5 Panel Report, paras. 7.294, 7.296, 7.297, 8.1(1)(b)(i).

3. The Panel erred in the interpretation of Article 3.1(b) of the SCM Agreement by requiring the
complaining Member to demonstrate that the measure at issue "per se and necessarily
exclude{s}" the use of imported goods, and on that basis, finding that the First Siting
Provision, considered alone, does not make the subsidies subject to that condition 6 de facto
contingent on the use of domestic over imported goods. 7 The European Union re quests the
Appellate Body to consider this appeal only if it does not find (in accordance with the appeals
described in paragraph 1 or 2, above) that the First Siting Provision, considered alone,
makes the subsidies subject to it de jure contingent on the use of domestic over imported
goods in violation of Article 3.1(b).
4. The Panel failed to make an objective assessment under Article 11 of the DSU in finding that
the F irst Siting Provision, considered alone, does not make the subsidies subject to that
condition8 de facto contingent on the use of domestic over imported goods, within the
meaning of Article 3.1(b) of the SCM Agreement .9 The European Union requests the
Appellate Body to consider this appeal only if it does not find (in accordance with the appeals
described in paragraph 1 or 2, above) that the First Siting Provision, con sidered alone,
makes the subsidies subject to it de jure contingent on the use of domestic over imported
goods in violation of Article 3.1(b).
5. The Panel erred in the interpretation of Article 3.1(b) of the SCM Agreement by requiring the
complaining Member to demonstrate that the measure at issue "per se and necessarily
exclude{s}" the use of imported goods, and on that basis, finding that the Second Siting
Provision,10 set out in Sections 5 and 6 of ESSB 5952, considered alone or together with the
First Siting Provision, does not make the B&O tax rate reduction (in respect of the 777X)
de jure contingent on the use of domestic over imported goods.11
6. The Panel erred in the application of Article 3.1(b) of the SCM Agreement in finding that the
Second Siting Pro vision, considered alone or together with the First Siting Provision, does
not make the B&O tax rate reduction (in respect of the 777X) de jure contingent on the use
of domestic over imported goods.12
7. The Panel failed to make an objective assessment under Article 11 of the DSU, in finding
that the Second Siting Provision, considered alone or together with the First Siting Provision,
does not make the B&O tax rate reduction (in respect of the 777X) de jure contingent on the
use of domestic over imported good s, within the meaning of Article 3.1(b) of the
SCM Agreement.13 In particular, the Panel's findings lacked a sufficient evidentiary basis.