UNITED STATES – CONDITIONAL TAX INCENTIVES FOR LARGE CIVIL AIRCRAFT REQUEST FOR CONSULTATIONS BY THE EUROPEAN UNION
Document: REQUEST FOR CONSULTATIONS BY
Date: 23 December 2014
Document codes: WT/DS487/1; G/SCM/D104/1; G/L/1099
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
REQUEST FOR CONSULTATIONS BY THE EUROPEAN UNION
The following communication, dated 19 December 2014, from the delegation of the
European Union to the delegation of the United States and to the Chairperson of the Dispute
Settlement Body, is circulated in accordance with Article 4.4 of the DSU.

My authorities have instructed me to request consultations with the Government of the
United States, pursuant to Articles 4.1 and 30 of the Agreement on Subsidies and Countervailing
Measures ("SCM Agreement"), Article XXIII:1 of the General Agreement on Tariffs and Trade 1994
(to the extent incorporated by Article 30 of the SCM Agreement ), and Article 4 of the
Understanding on Rules and Procedures Governing the Settlement of Disputes ("DSU"), with
respect to conditional tax incentives established by the State of Washington in relation to the
development, manufacture, and sale of large civil aircraft.
I. Background
In November 2013, the State of Washington, as part of its efforts to induce The Boeing Company
to manufacture its new 777X model of large civil aircraft in Washington State, vastly expanded and
amended its existing aerospace tax incentives, ther eby providing billions of dollars in additional
subsidies to Boeing. These expansions and amendm ents also made the continuing availability of
such tax incentives, in whole or in part, contingent upon (i) siting production of the wings and final
assembly for a new commercial aircraft model or variant in Washington State, and (ii) maintaining
all wing assembly and final assembly of such commercial aircraft exclusively in Washington State.
II. Measures at issue
The measures that are the subject of this request are tax incentives for civil aircraft provided by
the State of Washington, as amended by Substitu te Senate Bill 5952 (Chapter 2, Laws of 2013 3
rd
Special Session). Specifically, the tax incentives are currently contained in the following sections
of the Revised Code of Washington ("RCW"): 82.04.260(11) (preferential Business & Occupation
tax rate with respect to the manufacture or sale of commercial airplanes); 82.04.4463 (tax credits
for property taxes and leasehold excise taxes on commercial airplane manufacturing facilities);
82.04.4461 (tax credits for aerospace product development); 82.08.975 (sales tax exemption for
computer hardware, software, and peripherals); 82.08.980 (sales tax exemption for construction
services and materials); 82.12.975 (use tax exemption for computer hardware, software, and
peripherals); 82.12.980 (use tax exemption for construction services and materials); 82.29A.137
(leasehold excise tax exemption); and 84.36.6 55 (leaseholder property tax exemption).
Moreover, the availability of the tax incentives is subject to the conditions in Sections 2, 5, and 6
of Substitute Senate Bill 5952 (as codified at RCW 82.32.850 and 82.04.260(11)(e)(ii)), which are
also covered by this request.
In addition to the measures cited in the above paragraph, this request also covers any
amendments, supplements, extensions, replacement measures, renewal measures, related
measures, or implementing measures.
WT/DS487/1 • G/SCM/D104/1 • G/L/1099

III. Legal basis for the complaint
These measures constitute specific subsidies within the meaning of Articles 1 and 2 of the SCM
Agreement. Specifically, the measures provide a financ ial contribution in the form of "government
revenue … otherwise due" that is "foregone" with in the meaning of Article 1.1(a)(1)(ii), and "a
benefit is thereby conferred" within the meaning of Article 1.1(b). For reasons explained in the
following paragraph, the subsidies are specific within the meaning of Article 2.3 of the SCM
Agreement.
The European Union is concerned that the measures condition billions of dollars in subsidies upon
the use of aircraft components manufactured in Washington State. Specifically, conditions
contained in Sections 2, 5 and 6 of Substitute Senate Bill 5952 (as codified at RCW 82.32.850 and
82.04.260(11)(e)(ii)) make the subsidies "contingent … upon the use of domestic over imported
goods", within the meaning of Article 3.1(b) of the SCM Agreement. Accordingly, the European
Union considers that these measures are prohibited subsides that are inconsistent with
Articles 3.1(b) and 3.2 of the SCM Agreement.
IV. Statement of available evidence
In accordance with Article 4.2 of the SCM Agreement , an Annex to this request includes a
statement of available evidence as to the existence and nature of these subsidies.
  
The European Union looks forward to receiving a reply from the United States and to fixing a
mutually convenient date for consultations. Pursuant to Article 4.12 of the SCM Agreement, read in
conjunction with Article 4.3 of the DSU, a Member to which a request for consultations is
addressed shall reply within 5 days of its receipt. In this regard and in view of the end of the year
holiday period, the European Union can agree to receive the United States' reply by
7 January 2015.
WT/DS487/1 • G/SCM/D104/1 • G/L/1099

ANNEX
STATEMENT OF AVAILABLE EVIDENCE
For purposes of Article 4.2 of the SCM Agreement, the European Union sets out below evidence
available to it at this time regarding the existe nce and nature of the subsidies subject to this
request for consultations. The European Union reserves the right to supplement or alter this list in
the future, as required.
 Substitute Senate Bill 5952 (Chapter 2, Laws of 2013 3
rd Special Session) (Washington)
 Final Bill Report, Engrossed Substitute Senate Bill 5952
 Washington State Department of Revenue, Senate Bill 5952 (Aerospace Tax Incentives)
Fiscal Note
 Washington State Legislature, Bill Information: SB 5952 – 2013-14,
http://apps.leg.wa.gov/billinfo/summary.aspx?bill=5952
 Notification Letter on SSB 5952 Contingency from Carol G. Hunter, Director, Washington
State Department of Revenue, to Kyle Thie ssen, Washington State Code Reviser (10
July 2014)
 Revised Code of Washington 82.04.260(11); 82.04.4461; 82.04.4463; 82.08.975;
82.08.980; 82.12.975; 82.12.980; 82.29A.137; 82.32.850; 84.36.655 (2014)
 Non-BCI Version of the First Written Submission of the United States, US – Large Civil
Aircraft (Article 21.5 – EU) , 27 June 2013, available at
http://www.ustr.gov/sites/default/files/DS353.US_.Sub1_.Non_.BCI_.Fin_.Public.pdf
 Boeing News Release, "Boeing Launches 777X with Record-Breaking Orders and
Commitments", 17 November 2013
 Governor Jay Inslee, News Release, "Legislature approves key elements of 777X
incentive package", 9 November 2013
 Boeing News Release, "Boeing Statement on IAM 751 Contract Extension Vote",
4 January 2014
 Boeing News Release, "Boeing to Locate New 777X Composite Wing Center in Everett,
Wash.", 18 February 2014