EUROPEAN COMMUNITIES AND CERTAIN MEMBER STATES – MEASURES AFFECTING TRADE IN LARGE CIVIL AIRCRAFT RECOURSE TO ARTICLE 21.5 OF THE DSU BY THE UNITED STATES REPORT OF THE PANEL
Document: Addendum
Date: 22 September 2016
Document codes: WT/DS316/RW/Add.1; WT/DS316/RW.
Complainant: U.S.
Respondent: EU, France, Germany, Spain, United Kingdom
Third parties: Australia, Brazil, Canada, China, Japan, South Korea
Dispute stage: Retaliation & Arbitration
Agreements cited: Art. 3.1, 3.2, 5, 6.3  Subsidies and Countervailing Measures (SCM)Art. XVI:1  GATT 1994Art. 1, 2  Subsidies and Countervailing Measures (SCM)Art. III:4  GATT 1994

EUROPEAN COMMUNITIES AND CERTAIN MEMBER STATES –
MEASURES AFFECTING TRADE IN LARGE CIVIL AIRCRAFT
RECOURSE TO ARTICLE 21.5 OF THE DSU BY THE UNITED STATES
REPORT OF THE PANEL
Addendum
This addendum contains Annexes A to G to the Report of the Panel to be found in document

LIST OF ANNEXES

ANNEX A
WORKING PROCEDURES OF THE PANEL
Contents Page
Annex A-1 Working Procedures of the Panel A-2
Annex A-2 Procedures for the Partial Opening to the Public of the Substantive Meeting with
the Panel
A-5
Annex A-3 Additional Procedures to Protect Business Confidential Information and Highly
Sensitive Business Information
A-7
ANNEX B
ARGUMENTS OF THE UNITED STATES
Contents Page
Annex B-1 Executive Summary of the first written submission of the United States B-2
Annex B-2 Executive Summary of the second written submission of the United States B-9
Annex B-3 Executive Summary of the opening and closing statements of the United States
at the Panel meeting
B-17
ANNEX C
ARGUMENTS OF THE EUROPEAN UNION
Contents Page
Annex C-1 Executive Summary of the first written submission of the European Union C-2
Annex C-2 Executive Summary of the second written submission of the European Union C-9
Annex C-3 Executive Summary of the opening statement of the European Union at the
Panel meeting
C-14
Annex C-4 Executive Summary of the closing statement of the European Union at the
Panel meeting
C-19
ANNEX D
ARGUMENTS OF THE THIRD PARTIES
Contents Page
Annex D-1 Executive Summary of the statement of Australia at the Panel meeting D-2
Annex D-2 Executive Summary of the written submission of Brazil D-4
Annex D-3 Executive Summary of the statement of Brazil at the Panel meeting D-7
Annex D-4 Executive Summary of the written submission of Canada D-9
Annex D-5 Executive Summary of the statement of Canada at the Panel meeting D-13
Annex D-6 Executive Summary of the written submission of China D-16
Annex D-7 Executive Summary of the statement of China at the Panel meeting D-20
Annex D-8 Executive Summary of the written submission of Japan D-22
Annex D-9 Executive Summary of the statement of Japan at the Panel meeting D-26
Annex D-10 Executive Summary of the statement of the Republic of Korea at the Panel
meeting
D-31

ANNEX E
RULINGS WITH RESPECT TO DSU ARTICLE 13 REQUEST
Contents Page
Annex E-1 The United States' Article 13 request of 20 July 2012 (Panel ruling issued on
4 September 2012)
E-2
Annex E-2 The European Union's Article 13 request of 23 November 2012 (Panel ruling
issued on 14 December 2012)
E-10
ANNEX F
MAIN PROCEDURAL RULINGS OF THE PANEL
Contents Page
Annex F-1 The European Union's request concerning the question whether the
United States was required to return or destroy materials containing BCI and
HSBI from the original proceeding. (Panel ruling issued on 24 October 2012)
F-2
Annex F-2 The European Union's requests of 28 May 2013 concerning: (i) the
United States' Full HSBI Version Appendix and HSBI Exhibits submitted in
conjunction with its answers to the Panel's first set of que stions; and (ii) the
United States' alleged violations of the BCI/HSBI Procedures. (Panel ruling
issued on 5 June 2013)
F-4
Annex F-3 The European Union's requests of 28 May 2013 concerning: (i) the
United States' alleged failure to make a prima facie case and the "back-loading"
of arguments and evidence; and (ii) the United States' alleged unauthorized
access to European Union BCI/HSBI. (Panel ruling issued on 12 June 2013)
F-11
Annex F-4 The European Union's request of 14 June 2012 to exclude certain un timely
United States' exhibits. (Panel ruling issued on 28 June 2013)
F-20
Annex F-5 The European Union's requests of 28 June 2013 concerning the United States'
"critique" to the CompetitionRX Report presented in the United States'
comments to the European Union's answers to the Panel's first set of questions.
(Panel ruling issued on 8 July 2013)
F-23
Annex F-6 The European Union's requests of 2, 4 and 11 September 2013 concerning the
adoption of additional information confidentiality procedures for the p urpose of
responding to Panel question 126. (Panel ruling issued on 16 September 2013)
F-29
Annex F-7 The European Union's request of 24 March 2014 concerning the Panel's decision
to pose six additional written questions to the parties . (Panel ruling issued on
31 March 2014)
F-31
ANNEX G
THE EUROPEAN UNION'S COMPLIANCE COMMUNICATION OF 1 DECEMBER 2011
Contents Page
Annex G-1 The European Union's compliance communication of 1 December 2011
(WT/DS316/17)
G-2

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ANNEX A
WORKING PROCEDURES OF THE PANEL
Contents Page
Annex A-1 Working Procedures of the Panel A-2
Annex A-2 Procedures for the Partial Opening to the Public of the Substantive Meeting with
the Panel
A-5
Annex A-3 Additional Procedures to Protect Business Confidential Information and Highly
Sensitive Business Information
A-7

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ANNEX A-1
WORKING PROCEDURES OF THE PANEL
1. In its proceedings the Panel shall follow the relevant provisions of the Dispute Settlement
Understanding (DSU). In addition, the following working procedures shall apply.
2. The Panel shall conduct its internal deliberations in closed session. The parties to the dispute,
and interested third parties, shall be present at the meetings only when invited by the Panel to
appear before it.
3. The deliberations of the Panel and the documents s ubmitted to it shall be kept confidential.
Nothing in the DSU shall preclude a party to a dispute from disclosing statements of its own
positions to the public. Members shall treat as confidential information submitted by another
Member to the Panel which that Member has designated as confidential. Where a party to a
dispute submits a confidential version of its written submissions to the Panel, 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. At the request of either party, the Panel will consider adopting additional procedures for the
protection of confidential information. The Panel will consider proposals from the parties as to the
content of any such procedures, and will consult with the parties in this regard.
5. Before the substantive meeting of the Panel with the parties to the dispute, the parties shall
transmit to the Panel written submissions, and subsequently written rebuttals, in whic h they
present the facts of the case and their arguments, and their counter -arguments, respectively.
Third parties may transmit to the Panel written submissions after the first written submissions of
the parties have been submitted but before the rebuttals of the parties are submitted.
6. All third parties which have notified their interest in the dispute to the Dispute Settlement Body
shall be invited in writing to present their views during a session of the substantive meeting of the
Panel set aside for that purpose. All such third parties may be present during the entirety of that
session.
7. At its substantive meeting with the parties, the Panel will ask the United States to present its
case. Subsequently, and still at the same meeting, the Panel will ask the European Union to
present its point of view. The Panel thereafter will ask third parties to present their views at the
separate session of the same meeting set aside for that purpose. The parties will then be allowed
an opportunity for final statements, with the United States presenting its statement first.
8. The Panel may at any time put questions to the parties and to the third parties, and ask them
for explanations either in the course of the substantive meeting with the parties and/or third
parties, or in writing. Written answers to questions shall be submitted by a date to be specified by
the Panel.
9. The parties and third parties shall make all submissions in a WTO working language. Where the
original language of an exhibit or of text quoted in submission s or responses to questions is not a
WTO working language, the submitting party or third party shall submit a translation of the exhibit
or text into a WTO working language at the same time as the original language version. The Panel
may grant extensions o f time for the translation of exhibits or text into a WTO working language
upon a showing of good cause. Any objection as to the accuracy of a translation shall be raised in
writing and at the earliest possible moment. Any objection shall be accompanied by an explanation
of the grounds of objection and, if possible, an alternative translation.
10. A party to the dispute shall make available to the Panel and the other party a written version
of its oral statement not later than the first working day following t he end of the meeting of the
Panel at which the oral statement was presented. Third parties to the dispute shall make available
to the Panel, the parties and all other third parties a written version of their oral statements not

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later than the first workin g day following the end of the meeting of the Panel at which the oral
statement was presented. Parties and third parties are encouraged to provide the Panel and other
participants at the meeting with a provisional written version of their oral statements a t the time
that the statements are made.
11. In the interest of full transparency, oral presentations by a party shall be made in the
presence of the other party. Moreover, each party's submissions, including responses to questions
put by the Panel, shall be made available to the other party. Submissions by third parties,
including responses to questions put by the Panel, shall also be made available to the parties.
Third parties shall receive copies of the parties' first written submissions and rebuttals.
12. The parties shall provide the Secretariat with executive summaries of the claims and
arguments contained in their written submissions and oral presentations. The executive summaries
of the first written submissions and rebuttal written submissions shall be l imited to 10 pages each,
and the executive summaries of the oral statements at the meetings shall be limited to 5 pages
each. Third parties are requested to provide the Panel with executive summaries of their written
submissions and oral statements, of no more than 5 pages each. The executive summaries shall
not serve in any way as a substitute for the submissions of the parties and third parties in the
Panel's examination of the case. Any executive summary shall be submitted to the Secretariat
within ten d ays of the date on which the original submission is submitted or the original oral
statement is submitted in written form. Paragraph 20 shall apply to the service of executive
summaries.
13. The descriptive part of the Panel's report will include the procedural and factual background of
the present dispute. Description of the main arguments of the parties and third parties will consist
of the executive summaries referred to in paragraph 12, which will be attached to the report of the
Panel as annexes.
14. Parties shall submit any requests for preliminary rulings not later than in their first written
submissions to the Panel. If the United States requests such a ruling, the European Union sha ll
submit its response to the request in its first submission. If the European Union requests such a
ruling, the United States shall submit its response to the request prior to the substantive meeting
of the Panel, at a time to be determined by the Panel i n light of the request. Exceptions to this
procedure may be granted upon a showing of good cause.
15. Parties shall submit all factual evidence to the Panel no later than their first written
submissions, other than evidence necessary for purposes of rebuttals and answers to questions.
Exceptions to this procedure may be granted upon a showing of good cause. In such a case, the
other party shall be accorded a period of time for comment on the newly submitted evidence, as
the Panel deems appropriate.
16. To facilitate the maintenance of the record of the dispute, and for ease of reference to exhibits
submitted by the parties, parties are requested to number their exhibits sequentially throughout
the course of the dispute. For example, exhibits submitted by the Unite d States should be
numbered USA-1, USA-2, etc., and exhibits submitted by the European Union should be numbered
EU-1, EU-2, etc. If the last exhibit in connection with the first submission of the European Union,
for example, was numbered EU-5, the first exhibit of the next submission thus would be numbered
EU-6.
17. The parties and third parties may submit exhibits, and serve them on each other, as
electronic files saved on CD-ROMs. If a party or third party chooses to submit exhibits as electronic
files, it shall, in addition, submit 3 paper copies of such exhibits to the Secretariat, and one paper
copy of such exhibits to each party and third party.
18. The parties and third parties to this proceeding have the right to determine the composition of
their own dele gations. The parties and third parties shall have responsibility for all members of
their delegations and shall ensure that all members of their delegations act in accordance with the
rules of the DSU and the Working Procedures of this Panel, particularly in regard to confidentiality
of the proceedings. Each party and third party shall provide a list of the members of its delegation
before or at the beginning of the meeting with the Panel to the Secretary of the Panel, Mr. XXX.

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19. Following the issuance of the interim report, the parties shall have three weeks to submit
written requests to review precise aspects of the interim report. Following receipt of any written
request for review, each party shall have two weeks to submit written comments on the other
party's written request for review. Such comments shall be strictly limited to commenting on the
other party's written request for review.
20. The following procedures regarding service of documents shall apply:
a. Each party shall serve its submissions directly on the other party. Each party shall, in
addition, serve its first written submission and written rebuttal submission on the third
parties. Each third party shall serve its submissions on the parties and all other third
parties. Each party and third party sha ll confirm in writing that copies have been served
as required, at the time it provides each submission to the Panel.
b. The parties and third parties should provide their submissions to the Secretariat by
5:30 p.m. (Geneva time) on the due dates established by the Panel, unless a different
time is set by the Panel.
c. Each party and third party shall provide the Panel with eight (8) paper copies of all
documents submitted to the Panel. Where a party or a third party submits exhibits as
electronic files on CD -ROMs, it shall provide to the Panel four (4) CD -ROMS containing
such files, as well as three (3) paper copies. All of these copies shall be filed with the
Dispute Settlement Registrar, Mr. XXX (office number xxxx).
d. Each party and third party shall also prov ide to the Panel an electronic version of all
documents at the time that it provides the paper copies, in a format compatible with that
used by the Secretariat, either on a CD -ROM or diskette or as an e -mail attachment. E-
mail attachments shall be sent to the Dispute Settlement Registry (xxxx@wto.org), with
copies to XXXXX. If the electronic version is provided by diskette or CD -ROM, four (4)
copies shall be delivered to Mr. XXX (office number xxxx).
e. The Panel will endeavour to provide the parties with an e lectronic version of the
descriptive part, the interim report and the final report, as well as of other documents as
appropriate. When the Panel transmits to the parties or third parties both paper and
electronic versions of a document, the paper version s hall constitute the official version
for the purposes of the record of the dispute.

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ANNEX A-2
PROCEDURES FOR THE PARTIAL OPENING TO THE PUBLIC
OF THE SUBSTANTIVE MEETING WITH THE PANEL
(4 April 2013)
1. The Panel's meeting with the parties will start at 10:00 a.m. on 16 April 2013. The Panel will
invite the United States to first present its full opening oral statement before the floor is given to
the European Union to present its full opening oral statement. The oral statements will be
videotaped for later viewing, as set out in paragraph 6 below. If at any point during its oral
statement a party intends to utter BCI or HSBI, it shall request that the videotaping be
discontinued for the relevant portion of the oral statement, after which videotaping will be
resumed. A party may first deliver the part of its oral statement that contains no BCI or HSBI, and
then ask for the videotaping to be discontinued, before delivering a second part of its oral
statement containing BCI or HSBI.
2. BCI or HSBI in the texts of the oral statements provided to the panel and the other party
during the meeting and prior to the delivery of the oral statements shall be bracketed in
accordance with the BCI/HSBI Procedures. BCI should be contained within single brackets. HSBI
should be contained within double brackets and deleted. In addition, a party including HSBI in its
oral statement shall provide, prior to delivery of the oral statement, one paper copy to the panel
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. During the meeting with the parties, the following persons will be admitted into the meeting
room: (1) the P anel; (2) all BCI/HSBI -approved members of the delegations of the parties ;
(3) BCI/HSBI-approved WTO Secretariat staff assisting the Panel; and (4) the team hired by the
WTO Secretariat to videotape the proceedings. If at any point during its oral statemen t a party
intends to utter HSBI, those individuals not having HSBI approval shall be asked to exit the room.
If at any point a party intends to utter either BCI or HSBI, the team hired by the WTO Secretariat
to videotape the proceedings shall be asked to exit the room.
4. After each oral statement has been delivered, the Panel will ask the parties whether they
can confirm that no BCI or HSBI was pronounced during the videotaped portion of the oral
statement. If both parties so confirm, the showing of the videotape will proceed according to
schedule. If either party requests to review the videotape, both parties will be invited to attend
that review, accompanied by a representative of the Secretariat and the technician responsible for
editing, on the premis es of the WTO at an appropriate time after the meeting. Therefore, parties
should be prepared to advise the technician which portion of the oral presentation presents a
concern, and limit review to those portions of the videotape to the maximum extent poss ible. 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 third party session will start at 14:00 on 17 April 2013. Third parties sh all indicate to
the Panel, not later than close of business on 5 April 2013, whether they consent to the
videotaping of their oral statements for later viewing. The Panel will start the third party session
with the statements of those third parties so cons enting. After such third parties have made their
statements, any questions or comments from the parties, other third parties or the Panel
concerning these statements shall be made. The Panel shall then proceed to a third party closed
session during which t he rest of the third parties shall make their statements. The Panel or any
party or third party may pose questions to any third party or make comments concerning these
statements. Should any third party intend to include BCI in its oral statement or
otherwise to refer to BCI during the third party session, it is requested to inform the
Panel by close of business on 11 April 2013 so that appropriate arrangements can be made to
protect the confidentiality of that information.

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6. The showing of the videotape o f the oral statements of the parties and third parties shall
take place on 18 and 19 April 2013. The showing will be open to officials of WTO Members and
Observers, to accredited journalists, and to accredited representatives of non -governmental
organizations, upon presentation of their official badges. The Secretariat will place a notice by on
the WTO website by 4 April 2013 informing the public of the showing. The notice shall include a
link through which members on the public can register directly with t he WTO. The deadline for
public registration shall be close of business on 11 April 2013.

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ANNEX A-3
ADDITIONAL PROCEDURES TO PROTECT BUSINESS CONFIDENTIAL
INFORMATION AND HIGHLY SENSITIVE BUSINESS INFORMATION
(12 July 2012)
I. GENERAL
The following Procedures apply to all business confidential information ("BCI") and highly sensitive
business information ("HSBI") on the Panel record. These Procedures do not diminish the rights
and obligations of the parties to request and disclose any information withi n the scope of the
SCM Agreement and Article 13 of the DSU.

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. "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 or Third Party
has "Designated as BCI" because it is not otherwise available in the public doma in and its
disclosure could, in the Party's or Third Party's view, cause harm to the originators of the
information. Each Party and Third Party shall act in good faith and exercise restraint in designating
information as BCI, and will endeavour to designat e information as BCI only if its disclosure would
cause harm to the originators of the information.
3. "Conclusion of the Panel Process" means the earliest to occur of the following events:
a. pursuant to Article 16.4 of the DSU, the Panel report is adopted by t he DSB, or the DSB
decides by consensus not to adopt the Panel report;
b. a Party formally notifies the DSB of its decision to appeal pursuant to Article 16.4 of the
DSU;
c. pursuant to Article 12.12 of the DSU, the authority for establishment of the Panel lapses;
or
d. pursuant to Article 3.6 of the DSU, a mutually satisfactory solution is notified to the DSB.
4. "Designated as BCI" means:
a. for printed information, text that is set off with bold square brackets in a document
clearly marked with the notation 'BUSINESS CONFIDENTIAL INFORMATION' and with the
name of the Party or Third 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 a n 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 Part y or Third
Party that submitted the information; and

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c. for uttered information, declared by the speaker to be "Business Confidential
Information" prior to utterance.1
d. In case either Party objects to the designation of information as BCI under
paragraphs 4(a)-(c), the dispute shall be resolved by the Panel. If the Panel disagrees
with designation of information as BCI, the sub mitting Party or Third Party may either
designate it as non-BCI or withdraw the information. The Panel shall either destroy such
information or return it to the submitting Party or Third Party. Each Party or Third Party
may at any time designate as non -BCI information previously designated by that Party
or Third Party as BCI.
This paragraph shall apply to all submissions, including exhibits, by a Party or Third Party.

5. "Designated as HSBI" means:
a. for electronic information, in characters that are set off wi th 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 s torage medium with
a label marked 'HIGHLY SENSITIVE BUSINESS INFORMATION' and indicating the name
of the Party or Third Party that submitted the information; and
b. for uttered information, declared by the speaker to be "Highly Sensitive Business
Information" prior to utterance.2
This paragraph shall apply to all submissions, including exhibits, by a Party or Third Party.

6. "Electronic information" means any information stored in an electronic form (including but
not limited to binary-encoded information).
7. "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 or
Third Party has "Designated as HSBI" because it is not otherwise available in the public domain
and its disclosure could, in the Party's or Third Party's view, cause exceptional harm to its
originators. Each Party and Third Party shall act in good faith and exercise the utmost restraint in
designating information as HSBI. Each Party and Third Party may at any time designate as non -
BCI/HSBI or as BCI information designated by that Party or Third 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 services3, and, except as provided in subparagraph
7(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;
ii. information gathered or produced in the context of LCA sales campaigns;
iii. information concerning market for ecasts, analyses, business plans and
share/business valuations generated by LCA producers, consultants, investment
banks or the European Investment Bank, with regard to LCA products; or

1 The erroneous failure by a speaker to make such a prior declaration shall not affect the designation of
the BCI in question.
2 The erroneous failure by a speaker to make such a prior declaration shall not affect the designation of
the HSBI in question.
3 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.

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iv. information concerning an LCA manufacturer's costs of production, incl uding but not
limited to data regarding pricing by suppliers.
b. Each Party and Third Party may also Designate as HSBI other categories of business
information that is 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 and Third Party shall Designate as HSBI any information described in
subparagraph 7(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 demonstr ates 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 informat ion described in
subparagraph 7(a);
iv. the terms and conditions of loans, other than information described in
subparagraph (7)a; and
v. intergovernmental agreements and government decisions, other than information
described in subparagraph (7)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 7(a)-(e), the dispute shall be resolved by the Panel. If the Panel disagrees
with designation of information as HSBI, the submitting Party or Th ird Party may either
designate it as BCI, as non-BCI/HSBI or withdraw the information. The Panel shall either
destroy such information or return it to the submitting Party or Third Party. Each Party
or Third Party may at any time designate as non -BCI/HSBI or as BCI information
previously designated by that Party or Third Party as HSBI.
8. "HSBI Approved Person" means Approved Persons specifically designated by the Parties as
having the right to access HSBI (according to the procedures laid down in Section IV).
9. "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 the United States Mission to
the European Union in Brussels;
b. for HSBI submitted by the European Union, on the premises of the Delegation of the
European Union to the United States in Washington;
c. for HSBI submitted by a Third Party, on the premises of its Geneva Mission to the WTO.
10. "Locked CD" means a CD-ROM that is not rewritable.
11. "Outside Advisor" means a legal counsel or other advisor of a Party or Third Party, who:

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a. advises a Party or Third Party in the course of the dispute;
b. is not an employee, 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 of 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 or Third Parties in connection with these proceedings or
outside consultants who have been retained by such counsel to provide advice with regard to these
proceedings are not considered agents of an entity listed in subparagraph (b).

12. "Panel" means the DS316 compliance panel composed on 13 April 2012.
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 or Third Party.
16. "Sealed laptop computer" means a laptop computer having (software and hardware)
characteristics considered necessary by the submitting Party for protection 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 occupie d 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 General Counsel of the Office of the
United States Trade Representative (600 17th Street, NW, Washington, DC, USA), the
offices of the Import Admini stration, United States Department of Commerce (600 17th
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 Panel, and the other Party ha s 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 Panel.
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 Panel,
including but not limited to, correspondence, written submissions, exhibits, oral statements, and
answers to questions.

- A- 11 -

21. "Third party" means a Member having notified its interest in the dispute to the DSB
pursuant to DSU Article 10.
22. "Third Party BCI Approved Person" means a representative or Outside Advisor of a
third party granted access to BCI pursuant to paragraphs 30, 37, 38 and 44.
23. "WTO Approved Persons" means the Panel members, PGE members or experts appointed
by the Panel who in the opinion of t he Panel require access to BCI, 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 Panel meetings
involving BCI and/or HSBI).
24. "WTO Reading Room" means a room, located on the premises of the WTO, which a Third
Party BCI Approved Person may use to access a Party's submission that contains Party BCI.
25. "WTO Rules of Conduct" means the Rules of Conduct for the Und erstanding on Rules and
Procedures Governing the Settlement of Disputes, as adopted by the DSB on 3 December 1996
(WT/DSB/RC/1).
III. SCOPE
26. These procedures apply to all BCI and HSBI received by an Approved Person and by WTO
Approved Persons as a result o f the Panel process, and to all BCI reviewed, in accordance with
these procedures, by a Third Party BCI Approved Person.
27. Unless specifically otherwise provided herein, these procedures do not apply to a Party's or
Third Party's treatment of its own BCI and HSBI.
28. The Panel is aware that the European Union may need to submit information that it internally
classifies as "EU Top Secret", "EU Secret" or "EU Confidential". The Panel will to the extent possible
implement procedures for the protection of such cla ssified 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
29. At the latest on 18 May 2012, each Party shall submit to the other Party and Third Parties,
and to the Panel, a list of the names and titles of any Representatives and Out side Advisors who
need access to BCI submitted by the other Party and/or Third Parties 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 ind icate which Approved Persons need access to HSBI
submitted by the other Party and/or Third Parties and whom it wishes to have designated as HSBI
Approved Persons. Each Party may submit amendments to their list of Approved Persons by
submitting such amendments to the other Party and Third Parties, and to the Panel.
30. There shall be no Third Party HSBI Approved Persons. The designation of Third Party BCI
Approved Persons shall be governed by paragraphs 37 and 38.
31. 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".
32. WTO Approved Persons shall have access to BCI. T he Director -General of the WTO, or his
designee, shall submit to the Parties and Third Parties, and to the Panel, a list of the WTO
Approved Persons and shall identify which of those WTO Approved Persons shall additionally have
access to HSBI.
33. Unless a Party objects to the designation of an Outside Advisor of the other Party, the Panel
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

- A- 12 -

under paragraph 29 that would suggest that designation of an individual is not appropriate. If a
Party objects, the Panel shall decide on the objection within ten working days.
34. 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.
35. The Parties or the Director -General of the WTO, or his designee, may submit amendments to
their lists at any time, subject to th e overall limits set out in paragraph 31 and to objections for
the addition of new Approved Persons in accordance with paragraphs 33 and 34.
V. BCI
36. Only Approved Person s, WTO Approved Persons and Third Party BCI Approved Persons may
have access to BCI submitted in this proceeding. Third Party BCI Approved Persons may not have
access to Party-BCI other than that included in the submissions. Approved Persons, WTO Approved
Persons and Third Party BCI 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, WTO Approved Person o r Third Party BCI Approved
Person. No Third Party BCI Approved Person shall disclose BCI, or allow it to be disclosed, to any
person except another Approved Person, WTO Approved Person or Third Party BCI Approved
Person. These obligations apply indefinitely.
37. Each Third Party that wants to access Party -BCI contained in the first or rebuttal submission
of a Party shall submit to the other Party and Third Parties, and to the Panel, a list of the names
and titles of any Representatives and Outside Advisors (inc luding clerical or support staff) who
need access to such BCI and whom it wishes to have designated as Third Party BCI Approved
Persons. Each Third Party shall keep the number of Third Party BCI Approved Persons as limited as
possible. Each Third Party may designate no more than a total of 5 Representatives and Outside
Advisors as Third Party BCI Approved Persons.
38. Unless a Party objects to the designation of an Outside Advisor of a Third Party, the Panel
shall designate those persons as Third Party BCI 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 37 above that would suggest that designation of an individual is not
appropriate. If a Party objects, the Panel shall decide on the objection within ten working days. 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.
39. A Party shall make no more than one copy of any BCI submitted by the other Party or a Third
Party for each Secure site provided for that Party in paragraph 17.
40. Parties may incorporate BCI in internal memoranda for the exclusive use of Approved Persons.
Any memorandum and the BCI it contains shall be marked in accordance with paragraph 4.
41. BCI submitted by Approved Persons or by Third Party BCI Approved Persons pursuant to these
procedures shall not be copied, distributed, or removed from the Secure site, except as necessary
for submission to the Panel.
42. The treatment in a Party's submissions to the Panel of any BCI shall be governed by the
provisions of this paragraph, which shall prevai l 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 Panel, marked as indicated in
paragraph 4. 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 Panel, a version redacting any BCI. This shall b e referred 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 Panel;

- A- 13 -

c. A Non -BCI Version shall be sufficient to permit a reasonable understa nding 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
soon 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 Panel 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 responding Party 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 Panel. All of the protections
applicable to BCI und er these procedures, including the storage rules in Paragraph 46,
shall apply to such submissions. BCI exhibits to submissions may not be stored or
reviewed at these additional Secure sites. The responding Party shall submit the address
(including room number) of each of the additional Secure sites to the Panel and the
complaining Party.
43. Any document containing BCI shall not be copied in excess of the number of copies required
by the Approved Persons. All copies of such documents shall be consecutively numbered. The
making of electronic copies shall be avoided whenever possible. Such documents may be
transmitted electronically only by using secure e -mail. If a Party or Third Party submits to the
Panel 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.
44. Notwithstanding paragraph 20 of the Working Procedures 4, the following procedures apply to
the access by Third Parties to a Party's submission that contains Party-BCI.
a. A Party's Submission con taining Party-BCI shall not be serviced to Third Parties unless
both Parties agree otherwise.
b. Third Party BCI Approved Persons may view Party-BCI contained in a Party's first written
submission only in a Secure site or in the WTO Reading Room. Third Party BCI Approved
Persons may not bring into such room any electronic recording or transmitting devices.
Third Party BCI Approved Persons may not remove a Party's Submission containing
Party-BCI from such room, but may take handwritten notes of the Party -BCI contained
therein. Such notes shall be used exclusively for this dispute (that is, DS316). Each
person viewing a Party's Submission containing Party -BCI shall complete and sign a log
identifying the submission the person reviewed. The Party responsible for m aintaining
the particular Secure site, and the WTO Secretariat in the case of the WTO Reading
Room, shall maintain such log until one year after the Conclusion of the Panel Process.
Before entering and when leaving the room, Outside Advisors who are Third Party BCI
Approved Persons may be subject to appropriate controls.

4 Concerning service of documents.

- A- 14 -

c. If a Third Party BCI Approved Person removes from the Secure site or the WTO Reading
Room a handwritten memo in accordance with subparagraph 44(b) above, that Third
Party BCI Approved Person shall store the memo only in a locked security container.
Such memo shall be appropriately protected against improper inspection and
eavesdropping when being consulted and will be transmitted in sealed heavy duty double
envelopes only. The content of such memo shall not be incorporated, electronically or in
handwritten form, into the Non-BCI Version, as defined in paragraph 42(b).
d. All Third Parties that have designated Third Party BCI Approved Persons must inform the
Parties of the identity of the specific room (including the address and the room number)
in which the locked se curity container, as referred to in subparagraph (c) above, is
located.
e. If a Third Party BCI Approved Person removes from the Secure site or the WTO Reading
Room a handwritten memo in accordance with subparagra ph 44(b) above, such memo
shall not be copied in excess of the number of copies required by the Third Party BCI
Approved Persons. All copies of such documents shall b e consecutively numbered. The
making of electronic copies of such memo shall be prohibited.
f. A Third Party may not incorporate into the body of its submission any Party -BCI. If a
Third Party wishes to refer to any Party -BCI, the relevant arguments includin g such BCI
should be incorporated into a separate Appendix. Such Appendix shall not be serviced to
other Third Parties.
g. On the date determined by the Panel as the deadline to make the Third Party
submission, a Third Party shall service its submission only to the Parties and to the
Panel. The submission shall be serviced to the other Third Parties only after the Parties
have confirmed that the submission does not contain or disclose Party -BCI. A Party shall
make this confirmation or otherwise advise of any necessary change to the relevant
Third Party within 2 working days of receiving the submissions of Third Parties.
45. A Party or Third Party that wishes to submit or refer to BCI at a Panel meeting shall so inform
the Panel and the other Party, and Third Par ties as appropriate. The Panel shall exclude persons
who are not Approved Persons, WTO Approved Persons or, as appropriate, Third Party BCI
Approved Persons from the meeting for the duration of the submission and discussion of BCI.
46. Approved Persons and WTO Approved Persons shall store BCI only in locked security
containers. In the case of BCI submitted to the Panel, such locked security containers shall be kept
on the WTO Secretariat's premises, except that Panel members 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 c onsulted and will be
transmitted in sealed heavy duty double envelopes only. All work papers ( e.g., draft submissions,
worksheets, etc.) containing BCI shall, when no longer needed, be shredded or burned consistent
with normal government practice for destroying sensitive documents.
47. The Panel shall not disclose BCI in its report, but may make statements or draw conclusions
that are based on the information drawn from the BCI.
VI. HSBI
48. Unless otherwise provided below, HSBI shall be subject to all the restr ictions in Section V
applicable to BCI.
49. HSBI shall be submitted to the Panel in electronic form, using locked CDs or two Sealed laptop
computers connectable to 19" - 21" monitors, or in hard copy form, for access by WTO Approved
Persons designated pursuant to paragraph 32 as being additionally authorized to access HSBI. All
such HSBI shall be stored 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. WTO Approved
Persons designated pursuant to paragraph 32 as being additionally authorized to access HSBI may
view HSBI only in the designated secure location referred to ab ove. A Stand-alone printer may be

- A- 15 -

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 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 (i) in the form of handwritten notes that
may be used only on the WTO Secretariat's premises and which shall be destroyed once no long er
in use; and (ii) subject to appropriate precautions, for purposes of meetings of the Panel with the
Parties and any internal deliberations of the Panel, as provided for in paragraph 58(j).
50. 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
location listed in paragraph 9 located within the other Party's territory. 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.
51. If a Third Party submits HSBI, it shall notify the Parties of the fact that such submission has
been made. Each Third Party submitting HSBI 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 Parties, in the HSBI location listed in paragraph 9. 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.
52. Except as otherwise provided in these procedures, HSBI shall not be stored, transmitte d or
copied either in written or electronic form.
53. HSBI Approved Persons may view HSBI on the Sealed laptop computer maintained by the
other Party or a Third Party or, in the case of HSBI submitted on Locked CDs on a Stand -alone
computer, only in a designat ed room at one of the HSBI locations indicated in paragraph 9, or at
the designated secure location on the premises of the WTO Secre tariat referred to in
paragraph 49, unless otherwise mutually agre ed by the Parties. The designated room shall be
available to HSBI Approved Persons from 9:00 a.m. to 5:00 p.m. during official working days at
the respective HSBI location. The designated secure location referred to in paragraph 49 shall be
available 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, e xcept 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 vie wing the HSBI in the HSBI location or designated secure location
referred to in paragraph 49 shall complete and sign a log identifying the HSBI that the person
reviewed or, alternatively, such a log can be generated automatical ly. Each Party shall, for the
HSBI location within its territory referenced in paragraph 9, maintain such log until one year after
the Conclusion of the Panel Process . The WTO Secretariat shall, for the designated secure locati on
referred to in paragraph 49, maintain such log until one year after the Conclusion of the Panel
Process. Before entering and when leaving such room, Outside Advisors who are HSBI Approved
Persons may be subject to appropriate controls.
54. No HSBI Approved Person or WTO Approved Person designated pursuant to paragraph 32 as
being additionally authorized to access HSBI shall disclose HSBI to any person except another
HSBI Approved Perso n or WTO Approved Person designated pursuant to paragraph 32 as being
additionally authorized to access HSBI, and then only for the purpose of this dispute. This
obligation applies indefinitely.
55. HSBI may be proc essed only on Stand -alone computers. Any memorandum containing HSBI
shall not be transmitted electronically, whether by e-mail, facsimile, or otherwise.
56. A Party or Third Party that wishes to submit or refer to HSBI at a Panel meeting shall so
inform the P anel and the other Party, and Third Parties as appropriate. The Panel shall exclude
persons who are not HSBI Approved Persons or WTO Approved Persons designated pursuant to
paragraph 32 as being additionally authorized to access HSBI from the meeting for the duration of
the submission and discussion of HSBI.

- A- 16 -

57. All HSBI shall be stored in a safe at the relevant HSBI location or in accordance with
paragraph 49.
58. The treatment in a Party's submissions to the Panel 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 in corporated into a separate appendix to, but 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 c ontaining HSBI shall also submit, within a time period
to be set by the Panel, 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 ma y
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 and, if necessary to permit a reasonable
understanding of the substance of th e 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 sufficient detail to achieve this aim.
iii. The Panel 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 de tail 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 design ated
secure location referred to in paragraph 49, as appropriate, in the form of a locked CD.
If it is not practical to keep the Full HSBI Version Appendix in an HSBI location, 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. I n addition, the HSBI Appendix itself shall be marked with
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 Append ix shall have a file name that contains the
letters "HSBI VERSION".
g. The Party shall submit one copy of the Full HSBI Version Appendix to the Panel (through
Mr. XXX ) and two copies to the other Party in the form of two locked CDs. The Full HSBI
Version App endix 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
CD.

- A- 17 -

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 Panel and the other Party with proof that this has been done.
i. No more than one working day in advance of a Panel meeting with the parties, a Party
may, exclusivel y at that Party's Permanent Mission in Geneva, use the locked CD to
produce no more than one hard copy of the Full HSBI Version Appendix for each HSBI
Approved Person planning to attend that Panel meeting. All paper versions produced
pursuant to this subpa ragraph shall be collected by the Party concerned and destroyed
immediately after the conclusion of the meeting.
j. WTO Approved Persons designated pursuant to paragraph 32 as being additionally
authorized to acces s HSBI may, exclusively on the WTO premises, produce paper
versions of the Full HSBI Version Appendix for the purpose of, and immediately prior to,
a Panel 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 49. All paper versions produced pursuant to this subparagraph
shall be destroyed after the Conclusion of the Panel Process as defined in paragraph 3.
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
Panel, and serve them on the other Party in accordance with the applicable
procedures, at the time it serves the 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 Exh ibits 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 HSB I 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 d ocument, 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, as provided for in
paragraph 51 of these Procedures.
v. The Panel shall resolve any disagreement arising from the operation of this sub -
paragraph, and may take appropriate action to ensure that the provisions of this
paragraph are satisfied.
l. The Panel reserves the right, after consulting the parties, to amend the provisions of this
paragraph at any time in order to accommodate situations arising during Pane l
meetings, and the preparation of the interim report and the final report.
59. The Panel shall not disclose HSBI in its report, but may make statements or draw conclusions
that are based on the information drawn from the HSBI.

- A- 18 -

VII. RESPONSIBILITY FOR COMPLIANCE
60. Each Party and Third Party is responsible for ensuring that its Approved Persons and
Third Party BCI Approved Persons comply with these procedures to protect BCI and HSBI
submitted by each Party and Third Party, as well as with enforceable codes of p rofessional 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 or Third 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 designee, as appropriate, for appropriate action pursuant to
Section VIII of the WTO Rules of Conduct.
VIII. ADDITIONAL PROCEDURES
61. After consulting with the Parties, the Panel 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.
62. The Panel 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
63. Except as provided for in paragraph 64, after the Conclusion of the Panel Process as defined in
paragraphs 3(a), 3(c) or 3(d), or as contemplated in paragraph 65, within a period to be fixed by
the Panel, WTO Approved Persons, the Parties and Third Parties (along with all Approved Persons)
shall destroy or return all documents (including electronic material) or other recordings containing
BCI to the Party or Third Party that submitted such documents or other recordings. At the same
time, WTO Approved Persons and the Parties shall destroy and/or return any electronic material
submitted by a Party or Third Party that contains HSBI.
64. The WTO Secretariat shall retain one hard copy and one electronic version of any final report
of the Panel containing BCI, and one electronic version of all documents containing BCI submitted
to the Panel, recorded on locked CD(s), to be kept in sealed containers in a locked cabinet on the
premises of the WTO Secretariat.
65. After the Conclusion of the Panel Process as defined in parag raph 3(b), the Secretariat will
inform the Appellate Body of these procedures and will transmit to the Appellate Body any
BCI/HSBI governed by these Procedures. Such transmission shall occur separately from the rest of
the Panel record, to the extent possible. Following the adoption by the DSB of the Appellate Body
report pursuant to Article 17.14 of the DSU, or a decision by the DSB by consensus not to adopt
the Appellate Body Report pursuant to Art icle 17.14 of the DSU, the provisions of paragraphs 63
and 64 shall apply.
66. The hard drive of each Stand -alone computer and all media used to back up such computers
shall be destroyed at the Conclusion of the Panel Process.

- B-1 -

ANNEX B
ARGUMENTS OF THE UNITED STATES
Contents Page
Annex B-1 Executive Summary of the first written submission of the United States B-2
Annex B-2 Executive Summary of the second written submission of the United States B-9
Annex B-3 Executive Summary of the opening and closing statements of the United States
at the Panel meeting
B-17

- B-2 -

ANNEX B-1
EXECUTIVE SUMMARY OF THE FIRST WRITTEN
SUBMISSION OF THE UNITED STATES
1. Last year, the World Trade Organization ("WTO") ruled that the European Union ("EU") and
certain member States had subsidized the development of every single Airbus 1 aircraft over the
course of 36 years, resulting in adverse effects to the United States, to the detriment of the sole
remaining U .S. producer of large civil aircraft, The Boeing Company ("Boeing"). The Dispute
Settlement Body ("DSB") recommended that the relevant Members withdraw the subsidies or take
appropriate steps to remove their adverse effects by December 1, 2012. 2 Instead, the EU and the
other relevant Members did the opposite – they continued and even expanded their subsidization.
They did essentially nothing to remove the adverse effects of the subsidies, and in fact conferred
additional subsidies (with additional adverse e ffects) after the period covered by the rulings of the
DSB. They have accordingly failed to comply with the recommendations and rulings of the DSB
and continue to maintain WTO-inconsistent subsidies.

2. At this stage, there is no dispute about the nature and effect of the subsidies, most of which
came in the form of billions of dollars of financing granted by France, Germany, Spain, and the
United Kingdom for the development of Airbus aircraft. Whether called "launch aid," or "member
State Financing," or "LA/MSF" (the compromise term adopted by the original Panel), this financing
shares the same key features:

(1) unsecured: the lenders have no recourse against Airbus's assets, such that
repayment depends on the success of the model financed.3

(2) success-dependent: full repayment occurs only if the model in question is a
commercial success;

(3) levy-based: repayment takes the form of per -aircraft levies tied to deliveries of
the large civil aircraft financed; and

(4) back-loaded: the producer receives subsidies early during the development of the
aircraft, but repayments become due later, after deliveries commence, with a
graduated repayment schedule in some instances.

The financing confers a benefit in the sense of Article 1.1(b) of the SCM Ag reement in that the
relevant EU member States charged less, and typically far less, interest than a commercial lender
would have charged for financing on these terms.

3. The effect of these subsidies on Airbus has been critical. The original Panel found, and the
Appellate Body concurred, that absent the subsidies, Airbus would be a "much weaker LCA
manufacturer," and would have had "at best a more limited offering of LCA models." 4 Under the
most likely counterfactual scenarios, "Airbus would not have exist ed . . . and there would be no
Airbus aircraft on the market. None of the sales that the subsidized Airbus made would have
occurred."5 The effect on Boeing was stark – tens of billions of dollars of lost sales and
displacement of imports and exports from markets around the world.

4. Based on these findings, the EU and the relevant member States had an obligation to
withdraw the subsidies, or take appropriate steps to remove their adverse effects, by
December 1, 2011. Clearly, if they neglected to do either of these things, they would fail to comply

1 For purposes of this submission, "Airbus" has the meaning set out in EC – Large Civil Aircraft: Airbus
SAS, Airbus GIE, and current and predecessor affiliated companies of both Airbus SAS and Airbus GIE. EC –
2 Dispute Settlement Body, Minutes of Meeting held in the Centre William Rappard on 1 June 2011,
WT/DSB/M/247, para. 28 (11 July 2011). EC – Large Civil Aircraft (Panel), para. 8.7; EC – Large Civil Aircraft
(AB), para. 1418.
3 EC – Large Civil Aircraft (Panel), paras. 7.374-7.375; EC – Large Civil Aircraft (AB), para. 604.
4 EC – Large Civil Aircraft (AB), paras. 1269 and 1270.
5 EC – Large Civil Aircraft (AB), para. 1264.

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with the obligation. They would also fail to comply if they granted new subsidies with a "close
relationship" to the actionable subsidies at issue in the original dispute, 6 introduced new subsidies
that replaced the actionable subsidies already found to exist, 7 or introduced measures that
circumvented the DSB's recommendations and rulings.8

5. However, the EU's response to these massive subsidies and their adverse effects was to
keep on doing what it did in the 36 years covered by the original Panel's deliberations: give
subsidized funds to Airbus aircraft that took sales and market share from its U.S. competitor. On
the December 1, 2011, deadline for compliance with the DSB recommendations and rulings, the
EU transmitted a document to the United States and to the DSB (the "EU Notification") asserting
that it had taken 36 "steps" to bring its measures into conformity with its WTO obligations.
However, these steps did nothing to move toward WTO compliance:

 The EU Notification never mentions the $4 billion in LA/MSF for the A380, one of the
largest LA/MSF subsidies Airbus ever received, and one that the Appellate Body confirmed
as "a necessary precondition for Airbus' launch in 2000 of the A380."9

 The only "repaym ent" referenced, €1,704 billion in step 25, is no change at all, as it
consists almost entirely of funds Airbus paid to the German government in 1997 and 1998.

 Steps 1 through 24 report the "termination" of LA/MSF contracts related to the A300,
A310, A320, A330, and A340, without explaining what the term means. Mere "termination"
is a meaningless formality without repayment of past subsidies, which the EU has neither
claimed nor established. If the "termination" resulted in an effective forgiveness of
amounts due, it would actually confer a new subsidy.

 Steps 31 through 33 note the "termination" of subsidized Airbus models, 10 a development
rendered meaningless by the subsidization of the models that replaced them – the A330
and A350 XWB. Termination of the A340 program actu ally boosted Airbus earnings by
€460 million11 – scarcely an action that would eliminate subsidies or their adverse effects
on U.S. interests.

 With one exception, the remaining steps reflect EU inaction based on the theory that the
passage of time or other intervening events would result in the subsidies or their adverse
effects fading to insignificance, without any attempt to explain why this would be so.12

6. Airbus has itself been frank about the pointlessness of this exercise. Hans Peter Ring, the
Chief Financial Officer of EADS, Airbus' parent company, has confessed that Airbus retains every
franc, mark, peseta, pound, and euro of WTO-inconsistent subsidy that it received:

Q: "If I look at some of the articles about the WTO and complying with the WTO
ruling, it would suggest that you feel that you've now done something which
makes you now compliant, ex -A350, which is another debate. What exactly did
you do? Have you paid any money back?"

Hans Peter Ring: "No."13

7. This statement provides a one -word su mmary of the EU's plan of inaction. Instead of
modifying its behavior, the EU has made light of the DSB recommendations and rulings. Where the
Appellate Body found that without the subsidies, Airbus would most likely not exist at all, 14 the EU

6 E.g., US – Softwood Lumber CVDs (21.5) (AB), para. 77.
7 US – Upland Cotton (AB), paras. 237-238.
8 US – Softwood Lumber CVDs (21.5) (AB), para. 71.
9 EC – Large Civil Aircraft (AB), para. 1414(q).
10 EU Notification (Exhibit USA-001).
11 EADS Financial Statements 2011, p. 65 (Exhibit USA-014).
12 The one exception to this is the infrastructure-related subsidy for the Bremen airport runway. The
United States is not challenging the EU's compliance with the DSB recommendations and rulings with regard to
this subsidy.
13 Webcast, Q&A from Global Investor Forum 2011, EADS (Dec. 15, 2011), min. 21 ff. (Exhibit USA-
002).
14 EC – Large Civil Aircraft (Panel), para. 7.1984.

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concluded that "the economic impact of these support measures in the Large Civil Aircraft (LCA)
market has been found to be very limited."15 For its part, Airbus saw "no significant consequences
for Airbus or the European support system from today's decision." 16 In fa ct, Airbus has
interpreted the rulings as an affirmation of past funding practices – a "big victory for Europe." 17
Airbus CEO Tom Enders reacted to the Appellate Body's findings with the following statement:

It is good to see that the WTO has fully green lighted the public -private
partnership instruments with France, Germany, Spain and the UK. We now can
and will continue this kind of partnership on future development programs.18

8. The EU apparently agrees. Aside from generating the list of 36 ineffectual "steps" to comply
with the DSB recommendations and rulings, the responding parties' only substantive response has
been to give €3.5 billion in new LA/MSF for the newest Airbus model, the A350 XWB. 19 The EU
and the relevant member States have striven to keep information on the terms of the funding from
public scrutiny, apparently to avoid revealing information that would suggest inconsistencies with
its WTO obligations.20 However, public documents make clear that Airbus received its new LA/MSF
on the same key terms and conditions as its predecessors: unsecured, success -dependent, levy-
based, and back-loaded. Government statements further confirm that the relevant member States
granted the funding on better -than-commercial terms. Thus, it is clear that LA/MSF for the A350
XWB means that the EU has failed to comply with the recommendations a nd rulings of the DSB
because the funding is closely related to the subsidies already found inconsistent with the SCM
Agreement, replaces other actionable subsidies, and results in circumvention of the EU's
compliance obligations.

9. The original Panel no ted many examples of how the subsidies operated to create a full
Airbus product line that caused the U.S. large civil aircraft industry to lose numerous sales and
market share.21 Recent developments in the twin -aisle segment of the market provide another
concrete example of how LA/MSF allows Airbus to brush off its mistakes, and keeps Boeing from
enjoying its successes. The EU conceded in the original Panel proceeding that the 300 -400 seat
A340 and its subsequent derivates were aircraft that never would hav e been launched when they
were without LA/MSF. 22 Even so, the A340 and A340 -500/600 failed commercially, yielding only
375 sales over a 19 -year period, well below the 600 sales that manufacturers treat as the
minimum necessary for a successful large civil aircraft.23 Given these realities, the A340's failure
should have been a big blow to Airbus, particularly as it unfolded alongside the A380's weak

15 EU Press Release, WTO Airbus Case – Appellate Body overturns key findings of the Panel in favour of
the EU (May 18, 2011).
16 Airbus Press Release, WTO final ruling: Decisive victory for Europe (May 18, 2011) (Exhibit USA-
004).
17 Airbus Press Release, WTO Final Ruling: Decisive victory for Europe (May 18, 2011) (Exhibit USA-
004).
18 EADS Statement, WTO final ruling: Decisive victory for Europe (May 18, 2011) (Exhibit US-005)
(emphasis added). Similarly, Ranier Ohler, Airbus' Head of Public Affairs and Communications, said: "'WTO
confirmation of the European loan system is a big victory for Europe. We see no significant consequences for
Airbus or the European support system from today's decision, as the WTO has now fully and finally rejected
most of the US claims. Therefore, the WTO findings are likely to require only limited changes in European
policies and practices.'" Press Release, WTO final ruling: Decisive victory for Europe, Airbus (May 18, 2011)
(Exhibit USA-002).
19 E.g., Kevin Done and Peggy Hollinger, Airbus set to gain aid for A350, Financial Times
(June 15, 2009) (Exhibit USA-007).
20 Letter from Amb. Ron Kirk to Commissioner Karel Degucht (Aug. 5, 2011) (Exhibit USA-300).
21 E.g., EC – Large Civil Aircraft (Panel), para. 7.1993:
We consider that Airbus' market presence during the period 2001-2006, as reflected in its share
of the EC and certain third country markets and the sales it won at Boeing's expense, is clearly
an effect of the subsidies in this dispute. We therefore conclude that the displacement of United
States' LCA from the EC and certain third country markets and lost sales we have found during
the period 2001-2006 are an effect of the specific subsidies to Airbus that we have found."
22 EC – Large Civil Aircraft (AB), para. 1273 ("The European Union . . . accepts that a non-subsidized
Airbus would not have been able to launch the A300, A310, and A340 LCA projects by the 2001-2006 reference
period."); EC – Large Civil Aircraft (Panel), para. 7.1939 ("LA/MSF was necessary for Airbus to have launched
the A330/A340 in 1987, with LA/MSF covering between 60 and 90 percent of its development costs."); id.
para. 7.1940 ("LA/MSF was also essential to the development of the A340-500/600.").
23 EC – Large Civil Aircraft (Panel), para. 7.1717 (finding that developing large civil aircraft "is an
enormously complex and expensive undertaking" fraught with risk, where typically "at least 600 airplanes of a
new model must be sold before the revenues for a programme exceed the costs.").

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commercial performance and calamitous production problems. 24 At the same time, Boeing should
have been able t o enjoy the fruits of the unsubsidized development of the 777 and that aircraft's
huge success in the 300 -400 seat market segment, with more than 1300 sales in the 1995 -2011
period.

10. But Airbus did not suffer from the commercial failure of the A340, and Boeing did not fully
enjoy the commercial rewards for developing the 777 without subsidies. LA/MSF for the A340,
A380, and other models meant that the subsidizing governments bore a significant part of the
costs and risks of failure. Airbus fell far sh ort of the number of A340 deliveries necessary to repay
the LA/MSF it received – even at below -market interest rates – but far from hurting Airbus, the
A340 cancellation boosted income by €406 million (€312 million net) as it cleared LA/MSF liabilities
from its books. 25

11. The preferential, success -dependent repayment terms of LA/MSF gave Airbus the flexibility
to put its A340 mistakes behind it and try again in the 300 -400 seat segment with the A350 XWB-
900 and -1000. Before launching the A350 XWB in 2006, Airbus was "seriously questioning"
whether it had the ability to finance such a program, 26 especially as it was still mired in the
"monumental task" of bringing the A380 into commerc ial service.27 But LA/MSF – both for prior
models and for the A350 XWB itself – allowed Airbus to pass through this difficult time without
having to sacrifice its key product initiatives. Based on 40 -plus years of consistent subsidization,
the company maintained its position as the world's largest civil aircraft manufacturer, delivered the
A380, discarded the A340, and launched the all -new A350 XWB as a challenger to both the 787
and 777. On the last point, Airbus Chief Operating Officer, Customers, John Le ahy is very clear
about the commercial impact the company expects the A350 to have on the 777:

"I've got to give (Boeing) credit on the 777; if you need lift in the long -range
widebody market now, that's the plane," Leahy said, according to Bloomberg
News. "The day we deliver the first A350 -1000, the 777 -300ER will become
obsolete."28

12. The broader effect of these subsidies also appears in key market indicators, as Airbus itself
noted in a series of presentations it made to investors in early 2012. With Boeing's share of gross
orders falling from 81 percent in 1995 to 36 percent by year -end 2011, Airbus's market share
grew from 19 percent to 64 percent: 29

24 E.g., Time for a new, improved model: Airbus gets to work on its medium sized aircraft, but deeper
problems remain, Economist (July 20, 2006) (Exhibit USA-028) (noting that in light of problems with the A340
and the A380, "{t}his is . . . a horrible time for Airbus to be launching such an ambitious new project.").
25 EADS Financial Statements 2011, p. 65 (Exhibit USA-14); Hans Peter Ring, Webcast, Q&A from 9m
Results 2011, min. 41 ff. (Exhibit USA-015):
Ring: To start with your wording, 'the launch aid balance': actually it's repayable launch
investments, as we call them. I mean it's indeed that we are, I would say, adapting ourselves to
reality. We have not sold 340s since almost I think two years now, after we had announced that
we would build aircraft to order. So we were extremely successful as you know on the 330 and
on the 350, but 380 {sic} was not selling, and that means that there is a liability in the balance
sheet which is released, if you like, with this assessment, and that's the reason why it has a
positive impact on the P&L, in EBIT, and in net income, as you've heard.
26 Thomas Enders Interview, Le Monde (Oct. 13, 2007) (USA-008); Aaron Karp, Airbus/EADS officials
concede Boeing advantage, question A350 viability, Air Transport World Daily News (Oct. 6, 2006) (Exhibit
USA-009).
27 Mark Piling, Dream date, Airline Business (Apr. 1, 2004) (Exhibit USA-010).
28 Dominic Gates, Boeing may overtake Airbus as No. 1 jet-maker in 2012, Seattle Times
(Jan. 17, 2012), (Exhibit USA-011).
29 EADS Airbus, New Year Press Conference 2012 – Commercial review, slide 7 (Jan. 17, 2012) (Exhibit
USA-012).

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13. Airbus also trumpeted its perennial success as the "largest aircraft manufacturer" in terms of
deliveries from 2003 through 2011: 30

30 EADS Airbus, New Year Press Conference 2012 – Commercial review, slide 18 (Jan. 17, 2012)
(Exhibit USA-012).

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14. As the graph shows, it was in the 2001 -2006 period examined by the original panel that
Airbus finally achieved its goal of splitting the market roughly in half with Boeing. In
December 2011, Airbus described this market split as "the most important balance" for it to
maintain.31 However, as the original Panel found, and the Appellate Body concurred, without
LA/MSF, Airbus would not have been able to achieve or maintain this strong market position,32 and
quite probably would not have existed at all.33

15. Country markets and individual sales campaigns parallel these broad market trends. Airbus
continues to displace Boeing in EU and third country product markets, just as it causes significant
lost sales for Boeing in a number of sales campaigns involving hundreds of orders and tens of
billions of dollars.

16. From a compliance standpoint, the situation is largely the same as it was in the original
proceeding. LA/MSF has not been withdrawn. Airbus still supp lies the market with a product line
that it would not have without LA/MSF. Consequently, Boeing continues to lose sales and market

31 Marwan Lahoud, Views on EADS Strategy and Value Creation, slide 8 (Dec. 15-16, 2011) (Exhibit
USA-013).
32 EC – Large Civil Aircraft (AB), para. 1270 ("As we see it, the Panel's conclusion that a non-subsidized
Airbus would not have 'achieved the market presence it did over the period 2001 to 2006', which followed from
its views that a non-subsidized Airbus would be a 'much weaker LCA manufacturer' with 'at best a more limited
offering of LCA models', provided enough of a basis to establish a 'genuine and substantial relationship of
cause and effect' in this case.").
33 EC – Large Civil Aircraft (AB), para. 1263 ("{The EU's appeal} is premised exclusively on scenarios 3
and 4, on which the {EU} claims the Panel focused. We do not agree that this is a proper characterization of
the Panel's findings. In fact, the Panel found that scenarios 3 and 4, in which Airbus would have entered the
market without subsidies, were 'unlikely'."); ibid., para. 1264 ("Under scenarios 1 and 2, there was no need for
the Panel to proceed further in its counterfactual analysis. Without the subsidies, Airbus would not have existed
under these scenarios and there would be no Airbus aircraft on the market. None of the sales that the
subsidized Airbus made would have occurred.").

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share worth many billions of dollars. The only material change is a worsening of the compliance
situation, with the relevant EU member States in the midst of providing €3.5 billion in LA/MSF to
Airbus for the A350 XWB. Accordingly, and in light of the evidence and argumentation presented,
the United States respectfully requests that the compliance Panel work quickly to address the EU's
failure to comply with the DSB's re commendations and rulings in EC – Large Civil Aircraft. Almost
eight years after the commencement of this dispute, an end to LA/MSF as usual is long overdue.

17. Therefore, the United States respectfully asks the Panel to find that:

 With the exception o f the Bremen airport runway subsidy, the EU and relevant member
States have not withdrawn the subsidies covered by the DSB recommendations and
rulings;

 French, German, Spanish, and UK LA/MSF for the A350 XWB is a specific subsidy within
the meaning of Articles 1 and 2 of the SCM Agreement;

 French, German, Spanish, and UK LA/MSF for the A380 and the A350 XWB confers (1) an
export subsidy inconsistent with Article 3.1(a) of the SCM Agreement, and (2) an import
substitution subsidy inconsistent with Article 3.1(b) of the SCM Agreement;

 the EU and relevant member States have not removed the adverse effects covered by the
DSB recommendations and rulings;

 the United States continues to experience serious prejudice in the form of significant lost
sales under Article 6.3(c) of the SCM Agreement, including sales where the customer
ordered the A350 XWB;

 the United States continues to experience serious prejudice in the form of displacement
and impedance, and/or threat thereof, of its large civil aircraft imports into the EU market
under Article 6.3(a) of the SCM Agreement;

 the United States continues to experience serious prejudice in the form of displacement
and impedance of its large civil aircraft exports to 11 third -country markets under
Article 6.3(b) of the SCM Agreement;

 all subsidies provided to Airbus large civil aircraft , including LA/MSF provided to the A350
XWB, have a genuine and substantial causal relationship with the effects found; and

 the European Union has failed to comply with the recommendations and rulings of the DSB
by withdrawing the subsidies or taking appropriate steps to remove the adverse effects.

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ANNEX B-2
EXECUTIVE SUMMARY OF THE SECOND WRITTEN
SUBMISSION OF THE UNITED STATES
I. INTRODUCTION
1. The European Union 's ( "EU") first w ritten submission provides a spirited defense of . . .
doing nothing.
2. More specifically, the EU asserts that, after panel and Appellate Body findings that Airbus
received WTO -inconsistent subsidized financing worth billions of euros, with tens of billio ns of
dollars of adverse effects to U.S. interests, the EU could come into compliance by doing essentially
nothing. The EU goes even further to argue that the only meaningful acts it did take with regard to
large civil aircraft subsidies, grants of €3.5 billion in new subsidies for the A350 XWB, were
immune from review by this compliance panel. In any event, these new subsi dies only brought the
EU further from compliance with its WTO obligations.
3. This was not what the original Panel and the Appellate Body called for when they found that
the EU had conferred subsidies inconsistent with Article 5 of the Agreement on Subsidi es and
Countervailing Measures ("SCM Agreement"), and consequently had an obligation under Article 7.8
of the SCM Agreement to withdraw the subsidies or take appropriate steps to remove their adverse
effects. The Appellate Body has found that compliance wi th this obligation "will usually involve
some action by the respondent Member. This affirmative action would be directed at effecting the
withdrawal of the subsidy or the removal of the adverse effects. " The reverse is also true: "A
Member would normally not be able to abstain from taking any action on the assumption that the
subsidy will expire or that the adverse effects of the subsidy will dissipate on their own."
4. Yet that is exactly what the EU proposes. It 's first written submission makes clear what the
EU Notification1 strongly implied – that the measures the EU has taken either are doing nothing, or
are so small as to do nothing. (In fact, the EU essentially concedes that 12 of the LA/MSF -related
measures listed in the EU Notification are meaningle ss, as its first written submission does not
reference them.) In short, for purposes of Article 21.5 of the Understanding Governing Rules and
Procedures for the Settlement of Disputes ("DSU"), the measures taken to comply either do not
exist or, in the case of LA/MSF for the A350 XWB, exacerbate the WTO inconsistencies.
II. ANALYTIC FRAMEWORK
5. After adoption of the Panel and Appellate Body Reports in EC – Large Civil Aircraft , the EU
had an obligation to comply with the Dispute Settlement Body ( "DSB") rec ommendation to
withdraw the subsidies or take appropriate steps to remove their adverse effects. The question
before this panel, in considering a manner referred to it pursuant to Article 21.5 of the DSU, is
whether the responding party 's declared (or unde clared) measures taken to comply with the
recommendations and rulings of the DSB exist or are themselves WTO -inconsistent. The
recommendations and rulings of the DSB provide the measurement for judging compliance.
6. Article 21.5 instructs a panel to eval uate "the existence or consistency with a covered
agreement of measures taken to comply with the recommendations and rulings," which include the
underlying panel and Appellate Body findings, in effect, taking them as a given. It is equally
significant that Article 21.5 does not invite compliance panels to reopen or reconsider the DSB
recommendations and rulings. Indeed, it is difficult to see how a compliance proceeding could
function if the recommendations and rulings, which provide the basis for analyzing compliance,
could be subject to challenge. Thus, the DSB recommendations and rulings, including as embodied
in the panel and Appellate Body findings, are obviously important in identifying whether a measure
taken to comply exists, and in evaluating whethe r any unchanged elements of a measure are
consistent with the covered agreements. They can also play an important role in evaluating
whether a revised measure is inconsistent with the covered agreements.

1 Letter from the European Union to the United States (Dec. 1, 2011) ("EU Notification").

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III. THE SCOPE OF THIS COMPLIANCE PROCEEDING
7. Threat of serious prejudice claims. The EU argues that the case presented in the U.S.
first written submission "contains arguments regarding alleged threats of displacement and
impedance," while "the United States ' Article 21.5 Panel Request referred only to actual, rather
than threatened, displacement and impedance of imports. " Footnote 13 to Article 5(c) of the SCM
Agreement explicitly provides that "‘serious prejudice'…includes threat of serious prejudice. " The
U.S. panel request frames the U.S. claim in te rms of "adverse effects" (which include threat of
serious prejudice) and "subsidies . . . inconsistent with Articles 5(c), 6.3(a), 6.3(b), and 6.3(c) "
(which include threat of serious prejudice). Thus, the U.S. panel request includes any claims of
threat of serious prejudice embodied in the U.S. first written submission.
8. LA/MSF for the A350 XWB. The EU does not contest that LA/MSF for the A350 XWB has
the same four core terms as all previous LA/MSF, or that LA/MSF for the A350 XWB has the effect
of negating the EU's compliance with the DSB recommendations and rulings in this dispute, or that
the legal instruments conferring A350 XWB LA/MSF were issued from June 2009 onward, and that
disbursements occurred continually from 2009 to 2012. Rather, the EU inve nts and then subjects
the U.S. claims to an "overarching measure " test that has no basis in the text of the DSU or
previous panel or Appellate Body reports. The EU also raises several tangential issues regarding
the nature, effects, and timing of LA/MSF fo r the A350 XWB, but these are either contrary to past
Appellate Body reports or irrelevant to the issues before the Panel. Therefore, the EU has failed to
undermine the U.S. demonstration that LA/MSF for the A350 XWB is properly in the scope of this
proceeding because it satisfies the "close nexus" test.
9. Prohibited subsidy claims. The United States raised claims under Article 3.1(a) of the
SCM Agreement against LA/MSF for the A380 during the original proceeding, but the Appellate
Body ultimately did not resolve them. It is well established that a compliance panel may consider
claims in this procedural posture. Therefore, the EU 's argument that these claims fall outside the
Panel's terms of reference should be rejected. The EU also argues that the U.S. cla im against
LA/MSF for the A380 under Article 3.1(b) falls outside of this compliance Panel 's terms of
reference. However, the United States could not have raised its Article 3.1(b) claim at the time of
the original panel, so this closely related claim is within this Panel's terms of reference.
IV. THE EU 'S WTO -INCONSISTENT SUBSIDIES HAVE NOT EXPIRED, AND HAVE NO T
BEEN WITHDRAWN
A. Alleged Repayment on Subsidized Terms or "Termination" of Agreements Did Not
Cause the Subsidies to Expire
10. Financing confers a subsidy if the repayment terms are more favorable than the recipient
could have obtained on the market. Individual payments may be lower or they may be structured
in a way that makes them better for the recipient than a commercial financier would have a llowed.
Therefore, the recipient's payments in accordance with the terms of subsidized financing package
are the heart of the subsidy. They do not remove the subsidy, as the EU alleges, because the
benefit, in the form of what the recipient would have paid for commercial financing but did not pay
to the government, remains with the recipient.
B. The EU Arguments Regarding Amortization Do Not Properly Measure the Lives of
the Subsidies in Question, and Do Not Prove that They have Expired
11. Faced with its obligation to withdraw billions of euros in subsidized financing or remove their
adverse effects in the form of billions of dollars in lost sales and displacement in markets around
the world, the EU responds that it has no obligation to do anything, because amortization has
already taken care of the problem. That is wrong.
12. It is wrong because the Appellate Body has not, as the EU argues, found that the life of
LA/MSF or the various equity subsidies is determined through amortization. And, it is wrong
because the life of a subsidy creating a new product must be measured by the life of the product it
creates, and not by accounting conventions or projections as to the period that the product is likely
to remain competitive in the market. In other words, noth ing that the EU has stated demonstrates
in any way that the relevant subsidies at issue have expired or been repaid in any way.

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C. The Transactions Identified in the EU First Written Submission Did Not "Extract" or
"Extinguish" Prior Subsidies or Result in their Expiration
13. The Dasa and CASA transactions. The original Panel found that the Dasa and CASA
transactions did not extract or extinguish prior subsidies, and the Appellate Body upheld that
finding. That should end the inquiry; the EU had a chance b ut failed to make its case, and is
accordingly precluded from raising the issue again in an Article 21.5 proceeding. In any event, if
the Panel decides to revisit this question, the EU 's arguments regarding the Dasa and CASA
transactions fail at this stage for the same reason they failed before the original Panel and the
Appellate Body – the EU has not satisfied any of the elements of the test for establishing the
extraction of subsidies from Airbus. It has not shown that the cash transfers actually "extracted"
anything of value from EADS in the first place. It has also failed to show that the cash involved
was actually related to the value of past subsidies, rather than some other element in the value of
EADS. Thus, even if the Panel were to find that the D asa and CASA transactions were properly
before it, the EU has not met its burden of proof for the proposition that the Dasa and CASA
transactions reduced or eliminated the benefit from past subsidies to Airbus.
14. The Aérospatiale -Matra merger, the creati on of EADS, and acquisition of BAE
shares. The EU 's arguments on extinction fail for the most basic reasons – they rely on an
incorrect legal test, and the facts at issue do not satisfy the correct test. Identifying the legal test
to be used in this compli ance proceeding requires, among other things, a careful look at the
Appellate Body findings in EC – Large Civil Aircraft. First, the Appellate Body reversed the original
Panel's finding that partial privatizations and private -to-private transactions would not extinguish
subsidies. Second, Members of the Division agreed that an assessment of whether a transaction
extinguished subsidies required "a fact-intensive inquiry" into whether it was at fair market value
and arm's length, involved a transfer in ownership and control, and "whether a prior subsidy could
be deemed to have come to an end. " Third, they could not agree on what other criteria were
necessary, and took the unusual step of issuing separate views. The EU, however, does not base
its argument on a careful analysis of the Appellate Body report, and instead proceeds as if there
were a consensus, ignoring the serious concerns raised by two of the three Members. A proper
approach, which the United States applied in its first written submission, would ad dress the
concerns of all of the Appellate Body Members, before reaching a conclusion as to subsidy
extinction. Such an analysis demonstrates that the transactions cited by the EU did not extinguish
or withdraw prior subsidies.
D. The Appellate Body's Findings in EC – Large Civil Aircraft Preclude Treatment of the
Removal of the Financial Contribution, or the Expiration of Subsidies Alleged by the
EU as Withdrawing the Subsidies
15. The Appellate Body found that the role of the LA/MSF, capital, and regiona l subsidies in
creating the A300, A310, A320, A330, A340, and A380 established a genuine and substantial
causal link between the subsidies and the lost sales and displacement experienced by Boeing
between 2001 and 2006. The Appellate Body also found that t he expiration of subsidies prior to
the reference period would not necessarily preclude a finding that they had adverse effects during
that time. The Appellate Body made explicit findings that the extractions alleged by the EU did not
affect the value of p ast subsidies, but made no findings with regard to other transactions or
events. In short, the possibility that subsidies had expired did not prevent the original Panel and
the Appellate Body from finding those subsidies inconsistent with Article 5 of the SCM Agreement
due to their continuing adverse effects. Thus, as a compliance matter, the alleged expiration of
those same subsidies did not "withdraw" them or otherwise excuse the EU from the Article 7.8
obligation triggered by its earlier violations of Article 5.
E. The EU Fails to Rebut the U.S. Prima Facie Case that LA/MSF for the A350 XWB is a
subsidy
16. The U.S. first written submission demonstrated that the grantors of LA/MSF for the A350
XWB agreed that such financing was necessary precisely because capital markets were unwilling to
provide it. The EU attempts to rebut this evidence only by arguing that the United States has not
provided sufficient evidence to sustain a prima facie case. Its arguments fail, however, because
the EU provides no credibl e evidence that such financing is available from commercial financiers.
The documents the EU provided in response to the Panel 's request under Article 13 of the DSU
confirm that LA/MSF for the A350 XWB was on better -than-market terms, as demonstrated in

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economic analyses performed by NERA and included in the U.S. second written submission. The EU
explicitly concedes that LA/MSF for the A350 XWB was a financial contribution, so there is no
dispute on that point.
17. The EU does not dispute that the EU member States granted LA/MSF for the A350 XWB
because capital markets were unwilling to provide it. Specifically, the United States presented UK
and French government statements describing this financing as being "‘designed to address the
unwillingness of capital markets to fund projects'" like Airbus's launch of the A350, and "‘necessary
to supplement market financial support'." The United States also presented a German media report
confirming the same point about A350 XWB LA/MSF from all four Airbus governments.
V. GRANTS OF LA/MSF FOR THE A380 AND A350 XWB ARE PROHIBITED SUBSIDIES
18. As the U.S. first written submission demonstrated, LA/MSF for both the A380 and the A350
XWB are contingent in fact upon anticipated export performance. The design, structure, an d
operation of the subsidies themselves, which led to high levels of export sales, support this
conclusion. The U.S. first written submission also demonstrated that the Airbus governments
granted LA/MSF for the A380 and the A350 XWB in anticipation that Ai rbus would manufacture
aircraft components domestically, using domestic (rather than imported) goods and labor, and that
such components would be used to construct the aircraft. The United States demonstrated that the
grant of A380 and A350 XWB LA/MSF was made contingent upon such anticipated use of domestic
goods, making them prohibited under Article 3.1(b) of the SCM Agreement.
19. The EU failed to rebut the U.S. prima facie demonstration of inconsistency with
Articles 3.1(a) and 3.1(b). First, the United States demonstrates that none of the EU 's attempted
jurisdictional challenges regarding the A380 has any merit, in light of the unique procedural
posture and procedural history of the U.S. claims involved. Second, the United States reaffirms its
original presentation of the Appellate Body 's interpretation of the standard for de facto export
contingency, as well as its demonstration that A380 and A350 XWB LA/MSF meet that standard.
Third, the United States demonstrates that the EU 's brief comments on import substitution are
contradicted by prior Appellate Body reports, fail to engage wit h the U.S. claims under
Article 3.1(b), and fail to undermine the United States' prima facie case.
VI. THE UNITED STATES HAS DEMONSTRATED THAT THE EU HAS NOT TAKEN
APPROPRIATE STEPS TO REMOVE THE ADVERSE EFFECTS OF ITS SUBSIDIES, AND
THE EU HAS FAILED TO REBUT THE U.S. CASE
A. Introduction
20. The Panel 's assessment of the EU 's claim of compliance with the recommendations and
rulings of the DSB should be straightforward. The o riginal Panel found, and the Appellate Body
affirmed, that the EU gave Airbus billions of euros in subsidized financing – the largest amount of
subsidized financing in the history of the WTO and the GATT 1947 – resulting in tens of billions of
dollars of a dverse effects to the U.S. LCA industry. The DSB adopted these findings. As with the
subsidy findings, the EU response to the adverse effects findings against it was to do nothing that
would resolve the dispute. Where it did take action, it was to provide yet another round of LA/MSF,
this time to enable Airbus to launch and bring to market the A350 XWB in a manner that would
have been impossible otherwise. This is manifestly inappropriate. Under Article 7.8 of the SCM
Agreement, the EU needed to take action to remedy the situation. Because it has not done so, the
Panel should find that the EU has failed to comply.
21. With its first written submission, the EU confirmed that it relies overwhelmingly on inaction
in asserting that it has taken appropriate step s to remove the adverse effects. In the face of the
DSB's rulings and recommendations, the EU attempts to justify its inaction by citing two factors:
(1) withdrawal of prior subsidies, and (2) the passage of time. Neither supports the EU 's claim of
compliance. The United States has demonstrated that the EU has not withdrawn the subsidies. The
United States also demonstrates that the passage of time has not invalidated the underlying
findings or eliminated the causal link between the subsidies and adverse ef fects, notwithstanding
the EU's baseless assertions regarding Airbus's current financial situation, changes in conditions of
competition, and technological advances. As found by the original Panel and the Appellate Body,
Airbus's entire product line, the t echnologies applied on those products, and indeed Airbus 's

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financial condition are genuine and substantially related to the LA/MSF subsidies. Nothing has
happened since the reference period to undermine that conclusion. Therefore, the EU has failed to
comply with Article 7.8 of the SCM Agreement and with the rulings and recommendation of the
DSB.
B. The Analytical Framework Advocated by the EU is Deeply Flawed
22. The starting point in a compliance proceeding is the recommendations and rulings
of the DSB. T his is not a "new" case. The EU seeks to treat this compliance proceeding as a
new, entirely independent dispute. It argues that the United States must show present adverse
effects, presently caused, independent from and without any regard to the EU 's past conduct or to
the past measures and adverse effects at issue in the original dispute. The EU also contends that
the Panel should not look to any facts that pre -date December 1, 2011, as they are not "relevant
to the showing that the United States must mak e in these compliance proceedings. " For its part,
the EU considers itself free to ignore and/or re -litigate the original Panel and Appellate Body
findings, adopted by the DSB, that the EU gave billions of euros in subsidized financing to create a
line of A irbus aircraft that causes billions of dollars in adverse effects to the interests of the
United States. The EU is mistaken in each respect. The approach urged by the EU would require a
prevailing Member to obtain new findings in a new dispute without rega rd to the recommendations
and rulings adopted by the DSB in the original dispute. The EU approach is fundamentally at odds
with the nature of a proceeding under Article 21.5 of the DSU. The starting point must be the
DSB's recommendations and rulings.
23. In this case, the Appellate Body concurred with the original Panel's conclusion that under the
most likely counterfactual scenario in the absence of the subsidies, "Airbus would not have existed
. . . and there would be no Airbus aircraft on the market. N one of the sales that the subsidized
Airbus made would have occurred." At a minimum, absent the subsidies, Airbus would be a "‘much
weaker LCA manufacturer,'" and would have had "‘at best a more limited offering of LCA models. '"
The original Panel and the Appellate Body made clear findings as to the product effects of LA/MSF,
which enabled Airbus to develop and bring to market each of its models of LCA as and when it did.
The original Panel and the Appellate Body recognized that the primary effects of LA/MSF to a given
Airbus model was to cause that model to be launched when and as it was and to thereby inject
supply into the market that would not exist otherwise. The presence of such subsidized aircraft
enabled and continues to enable Airbus to capture sale s and market share at the expense of the
U.S. industry.
24. The EU has not fulfilled the mandate of Article 7.8 of the SCM Agreement and the
requirement to "take appropriate steps to remove adverse effects. " The United States
demonstrates again the continued validity of the underlying findings – including the causal link – in
the current market situation, the absence of any meaningful action by the EU to address the
situation, and the unabated, continuing present adverse effects in the form of significant lost sales
and displacement and impedance, and threat thereof. None of the EU 's asserted compliance steps
did anything to address, let alone remove, LA/MSF 's adverse effects. In fact, the sole notable
action that the EU did undertake was to compound the adverse effects by giving yet another round
of LA/MSF to the A350 XWB.
C. Conditions of Competition and Product Markets
25. In its first written submission, the EU largely does not dispute the conditions of competition
found by the original Panel and the A ppellate Body and cited by the United States. The notable
exception is that the EU for the first time asserts the existence of seven wholly separate product
markets, four of which are purportedly monopoly markets with no competition. This is contrary to
adopted Appellate Body findings, in which the Appellate Body agreed with the EU 's prior position
that LCA could properly be divided into three appropriate product markets – single aisle, twin aisle,
and very large aircraft. The EU 's approach in this complian ce proceeding does not bear any
resemblance to real patterns of competition involving large civil aircraft.

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D. The EU Has Failed to Rebut the U.S. Demonstration that EU Subsidies to Airbus
Continue to Cause Present Adverse Effects
26. In its first written submission, the United States demonstrated a causal link based on the
findings of the original Panel and the Appellate Body, the absence of any meaningful action by the
EU to address the situation, and the fact that lost sales and lost market share have c ontinued
unabated. The U.S. demonstration that LA/MSF continues to cause adverse effects is based on
three principal points. First, the original Panel and the Appellate Body found that LA/MSF had
"product effects," enabling Airbus to supply the market with aircraft that it would not otherwise
have had when and as it did, and these aircraft took sales and market share from the U.S.
industry. Second, none of the EU 's asserted compliance steps did anything to address, let alone
remove, the product effects of L A/MSF. In fact, the sole notable action that the EU did undertake
was to compound the product effects of LA/MSF by giving yet another round of it to the A350
XWB. Third, the pattern of lost sales and lost market share has persisted from the original
reference period up through the present, despite the EU's claims of compliance.
27. The EU's first written submission confirms that it has not taken meaningful compliance steps
to remove the adverse effects that LA/MSF causes. Its submission is devoid of referen ce to EU
action that could remove or even mitigate the effects of LA/MSF that continue to so severely
distort competition in the LCA industry. Unable to rely on real compliance action, the EU tries to
rebut the U.S. causation demonstration in four ways: (1 ) the supposed withdrawal, through
expiration or extraction, of LA/MSF to all Airbus LCA from the A300 through the A340 (it argues
the same for the A380 LA/MSF, although its arguments betray a lack of confidence that it has
withdrawn LA/MSF to the A380); ( 2) subsequent investment by Airbus and its suppliers in the
A320 and A330; (3) Airbus 's supposed ability to launch the A380 in the absence of LA/MSF; and
(4) Airbus 's supposed ability to launch the A350 XWB in the absence of LA/MSF. All of these
arguments fail.
28. Indeed, as is clear from its argument, the EU concedes that it did nothing to break the
causal relationship between the LA/MSF and other subsidies and serious prejudice to the United
States. Rather, it argues that conditions have changed such th at an entirely new assessment of
causation must take place. But the causal mechanism identified by the original Panel and
confirmed by the Appellate Body still operates, including through LA/MSF to the A350 XWB. The
EU's portrayal of the causal nexus as non-existent is incorrect, as the evidence confirms.
E. The EU has Failed to Rebut the U.S. Demonstration of Significant Lost Sales
29. The United States continues to experience significant lost sales. In its first written
submission, the United States docum ented over one thousand lost sales, together worth tens of
billions of dollars of lost revenues for the U.S. LCA industry. This pattern has continued unabated
from the original reference period through the end of the RPT, December 1, 2011, and on to the
date of referral of this matter to the compliance Panel. Since that time the United States has also
lost significant sales campaigns involving Hong Kong Airlines and Norwegian Air Shuttle, as
demonstrated in the first written submission, and also three addit ional sales campaigns that have
occurred since the filing of the U.S. first written submission.
30. This consistent pattern of continuing significant lost sales reflects the absence of any
meaningful action by the EU to remove the adverse effects of the WT O-inconsistent subsidies at
issue in this dispute. Indeed, the EU does not claim to have taken any steps on its own initiative to
remove adverse effects in the form of lost sales. Rather, the EU points to the "delivery" of Airbus
aircraft and Airbus's termination of the A340 program as compliance "steps". These arguments are
misplaced. The EU itself had an obligation itself to take appropriate steps to remove the adverse
effects, and is not entitled to rely on Airbus 's independent business decisions to sati sfy this
obligation. In any event, Airbus 's completion of deliveries and the termination of the A340
program have not removed the adverse effects caused by LA/MSF.
31. Given the persistence of lost sales and the absence of meaningful compliance action, the EU
has nothing to offer in rebuttal beyond erroneous arguments regarding purported "non-attribution
factors." For example, the EU argues that Airbus 's first sale to an airline customer generates a
"strong disposition " to buy Airbus aircraft in the future and that this disposition is a "non-
attribution factor," without explaining how Airbus could have offered any of the LCA it sold to that

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customer without LA/MSF. In addition, according to the EU, if an airline customer purchases an
Original A350, this is a nother "non-attribution factor " with respect to subsequent A350 orders.
These are not valid "non-attribution factors." They in no way alter the fact that Airbus obtained
these sales with aircraft that it would have been unable to offer in the absence of th e LA/MSF and
other subsidies. The EU 's so-called non-attribution factors are themselves the effects of LA/MSF,
as any incumbency advantages that Airbus enjoys by virtue of previously obtained sales are the
direct result of earlier LA/MSF.
F. The EU has Fa iled to Rebut the U.S. Demonstration of Displacement, Impedance,
and Threat Thereof in the EU Market and Certain Third Country Markets
32. The U.S. LCA industry continues to suffer adverse effects in the form of displacement,
impedance, and/or the threat t hereof within the meaning of Article 6.3(a) and (b) of the SCM
Agreement. The U.S. first written submission demonstrated that such adverse effects are presently
occurring in the EU market and 11 third -country markets. These adverse effects have continued
during the first half of 2012, and the continued existence of displacement and impedance
underscores the EU's failure to take any meaningful steps to remove the adverse effects at issue in
this dispute.
33. In its second written submission, the United State s presents updated data demonstrating
displacement, impedance, and/or threat thereof in the EU market and 11 third -country markets
continuing through the date of referral of the matter to the compliance Panel and to the present.
These data supplement the d ata tables in the U.S. first written submission for the time period
2001-2011, with the inclusion of additional market activity in the first half of 2012. Data for the
first half of 2012 generally reinforce the conclusions drawn from the data in the U.S. f irst written
submission.
34. The use by the United States of pre -December 2011 market data as evidence to
demonstrate continuing displacement and impedance in no way implies that WTO remedies are
"retroactive," as the EU erroneously suggests. Rather, the data relied on by United States serve as
evidence of present market displacement and impedance, as they demonstrate long -term market
trends, and confirm that the U.S. LCA industry continues to suffer displacement and impedance
during the 2001-2012 time period as a result of LA/MSF. The EU does not dispute the accuracy of
the data underlying the U.S. demonstration of presently continuing market displacement and
impedance. Separately, many of the EU 's arguments are contradicted by points the United States
made in its first written submission.
35. The remaining so -called "non-attribution factor " suggested by the EU – "Boeing's high
market share" – is also an argument without merit. Nothing in the text of the SCM Agreement
indicates that a WTO Member may not brin g a claim for adverse effects resulting from WTO -
inconsistent subsidies in markets where its industry enjoys a high market share.
36. This leaves the market data presented by the United States in its first written submission
and updated in the second writt en submission. The data, viewed in the context of LA/MSF 's
product effects, demonstrate that displacement and impedance continue as a result of the EU 's
failure to take appropriate steps to remove the adverse effects of LA/MSF and other subsidies to
Airbus. The EU contends that such data are insufficient and that independent narratives detailing
evidence of lost sales campaigns are necessary to support these claims. To the contrary, such a
requirement would effectively subordinate or convert displacement an d impedance claims into lost
sales claims, even though these explicitly are two separate and independent forms of serious
prejudice under Article 6.3 of the SCM Agreement. Furthermore, in the original proceeding, the
DSB adopted findings of displacement in China and Korea notwithstanding the lack of any specific
findings of lost sales involving Chinese or Korean airline customers. There is simply no basis for
the EU to challenge U.S. displacement and impedance claims because they may be unaccompanied
by corresponding lost sales claims. And finally, there is no dispute between the parties about the
underlying data.
37. In any event, the United States has also demonstrated particular lost sales in the EU single -
aisle, twin-aisle, and very large aircraft marke ts (those of easyJet, Air Berlin/NIKI, Czech Airlines,
Norwegian Air Shuttle, Iberia Airlines, Air France – KLM, and British Airways); the Australian
single-aisle and very large aircraft markets (Qantas and Qantas Airlines/Jetstar Airways); the

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Korean twin -aisle and very large aircraft markets (Korean Air and Asiana Airlines); the
Singaporean twin-aisle and very large aircraft markets (Singapore Airlines); and the United Arab
Emirates very large aircraft market (Emirates).
VII. CONCLUSION
38. The EU first written submission does not change the key facts of this compliance dispute:
LA/MSF and other subsidies have not been withdrawn; additional LA/MSF has been provided to the
A350 XWB on the same core terms and conditions as all prior LA/MSF to Airbus, includ ing on
better-than-commercial terms; Airbus still supplies the market with a product line that it would not
have without LA/MSF, and that product line is now even more competitive with the market entry of
the A350 XWB; and, consequently, Boeing continues t o lose sales and market share worth many
billions of dollars.

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ANNEX B-3
EXECUTIVE SUMMARY OF THE OPENING AND CLOSING STATEMENTS
OF THE UNITED STATES AT THE PANEL MEETING
1. What is most remarkable about this dispute is how little has changed in the last eight years.
In spite of the longest, most complex WTO dispute ever, and the largest -ever findings of
subsidization and serious prejudice, the EU has done nothing to change its WTO -inconsistent
behavior. It has withdrawn only a few tiny subsidies, and has taken no meaningful steps to remove
the adverse effects of the $15 billion in subsidized financing that it left untouched. And then, just as
the original panel was completing its work, the EU granted Airbus more than $4 billion in subsidized
financing for the A350 XWB with the same core terms as LA/MSF for earlier aircraft, and once again
with a massive benefit.

I. THE EU 'S FAILURE TO WITHDRAW THE LA/MSF SUBSIDIES AND GRANT OF NEW
SUBSIDIES FOR THE A350XWB
2. The Appellate Body has found that, as used in Article 7.8, "withdraw" means "to 'remove' or
'take away' and 'to take away what has been enjoyed; to take from.'"1 It elaborated in US – Upland
Cotton that this obligation implies "affirmative action " by the responding Member, which "would
normally not be able to abstain from taking any action on the assumption that the subsidy will
expire or that the adverse effects of the subsidy will dissipate on their own. "2 The EU argues that
the "accrual and diminishment of the subsidy " by itself "accomplished withdr awal."3 But the
Appellate Body explicitly found that the accrual and diminution of a subsidy is a matter for the
analysis of the effects of the subsidy.4

3. Application of this analysis to the compliance measures identified by the EU establishes that
they did not withdraw the subsidies found to exist.

 The supposed termination of LA/MSF contracts, which the EU now asserts as evidence that
Airbus and EU member States "recogniz{e}" withdrawal of subsidies through other means,
are simply their interpretation of WTO rules, and entitled to no evidentiary weight.

 EU "repayments" covered only the below -market interest rates charged by the EU member
States and, accordingly, did not withdraw the subsidy, which includes the benefit conferred
by those subsidies.

 The Appellate Body has identified the end of the life of a subsidy as a matter for the adverse
effects analysis, not withdrawal. And, even if the life of the subsidy were relevant to the
question of withdrawal, the proper measurement of that life is the actual life of the subsidized
aircraft program, which means that the subsidies in question have not ended.

 As a factual and legal matter, the transactions cited by the EU did not "extinguish" subsidies
or "extract" them from Airbus.

4. We now turn to the EU 's latest subsidies to Airbus, more than $4 billion in LA/MSF for the
A350 XWB. As we have pointed out, this financing operates just like traditional LA/MSF for earlier
aircraft programs. It has the same four core terms, confers a benefit to Airbus, and has the effect
of enabling aircraft launches that would otherwise not occur. These characteristics establish a close
relationship with previous grants of LA/MSF that justifies including them all in the scope of this
proceeding. They also establish that there is no market instrument that shifts risk in the way and
on the terms that LA/MSF does.

1 EC – Large Civil Aircraft (AB), para. 754.
3 EU SWS, para. 86.
4 EC – Large Civil Aircraft (AB), para. 714.

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5. Dr. Jordan demonstrated that all four instances of LA/MSF for the A350 XWB are subsidies. 5
In a report appended to the EU second written submission, Prof. Whitelaw presents a number of
criticisms of Dr. Jordan 's approach. It is significant, however, that Prof. Whitelaw never disagrees
with Dr. Jordan 's ultimate conclusion: that LA/MSF for the A350 XWB conferred a benefit. In fact,
performing the calculations describe d (but not performed) by Prof. Whitelaw, with only one non -
controversial correction, demonstrates that LA/MSF for the A350 XWB is a subsidy.

II. THE EU HAS GRANTED PROHIBITED SUBSIDIES TO AIRBUS.
6. Consistent with the Appellate Body 's guidance, the Unite d States has demonstrated that the
anticipated export ratio in contemplation of receiving the A380 and A350 XWB LA/MSF,
respectively, is significantly higher than the corresponding baseline ratio in the absence of the
respective subsidies. Thus, the granti ng of the A380 and A350 XWB subsidies was tied to
anticipated export performance or export earnings and, therefore, runs afoul of Article 3.1(a) of the
SCM Agreement.

7. LA/MSF for the A350 XWB is also prohibited under Article 3.1(b) of the SCM Agreement. As a
condition of receiving LA/MSF, Airbus, in producing the A350 XWB, is contractually required to use a
variety of domestic, and not imported, goods. In addition, Airbus agreed to certain employment
requirements, which could only be fulfilled by produci ng in the EU the goods for downstream use.
Furthermore, there is no vertical integration exception to Article 3.1(b). The evidence demonstrates
clearly that the EU made the granting of LA/MSF for the A350 XWB contingent upon the use of
domestic over imported goods, the epitome of what Article 3.1(b) prohibits.

III. THE EUROPEAN UNION HAS FAILED TO REMOVE THE ADVERSE EFFECTS AND
CAUSED ADDITIONAL ADVERSE EFFECTS BY PROV IDING NEW SUBSIDIES TO THE
A350 XWB.
8. The original panel found, and the Appellate Body affirmed, that given the tremendous costs
and risks associated with the development of large civil aircraft, Airbus would not have launched
any of its large civil aircraft absent LA/MSF. 6 Because Airbus did receive LA/MSF, the U.S. LCA
industry experienced adverse effects on a massive scale: The significant lost sales findings cover
more than 400 aircraft orders worth many billions of dollars, and the displacement findings cover
seven major country markets.

9. The situation is no better today. Rather than withdraw the subsidies or remove their adverse
effects, the EU has carried on as if it is business as usual with LA/MSF. The latest iteration: billions
of euros in LA/MSF provided to Airbus for the A350 XWB. 7 As a result, the United States continues
to suf fer serious prejudice, and the United States continues to be deprived of an appropriate
remedy under Article 7.8 of the SCM Agreement.

10. For example, the original panel found, and the Appellate Body upheld, that "either directly or
indirectly, LA/MSF was a necessary precondition for Airbus ' launch in 2000 of the A380. "8 Nothing
has changed since the original Panel's finding. The EU has not withdrawn the LA/MSF that, indirectly
and directly, was a necessary precondition for the launch of the A380. The EU 's counter-argument
regarding causation otherwise has already been rejected by the original Panel and the Appellate
Body.9 Thus the EU cannot establish now what it tried and failed to establish in the original dispute,
and so its A380 causation arguments should once again be rejected even if the Panel were to ignore
the effects of pre-A380 LA/MSF (which the United States contends is not appropriate).10

11. The Appellate Body found that WTO -inconsistent subsidies to the EU resulted in the
displacement of Boe ing like products based on three product markets: single aisle, twin aisle, and

5 NERA, Comparison of A350 XWB LA/MSF Interest Rates with Market Benchmarks, Oct. 18, 2012
(Exhibit USA-475(BCI/HSBI)) ("Jordan Report").
6 EC – Large Civil Aircraft (Panel), paras. 7.1934 (A300), 7.1936 (A310), 7.1938 (A320), 7.1939
(A330/A340), 7.1940 (A330-200), 7.1941-7.1942 (A340-500/600), 7.1948 (A380); EC – Large Civil Aircraft
(AB), paras. 1273 (A300, A310, A340, A340-500/600), 1275 (A320, A330), 1356 (A380).
7 See US FWS, Summary of U.S. Lost Sales Claims Demonstrating EU Failure to Take Appropriate Steps
to Remove Adverse Effects (Exhibit USA-164).
8 EC – Large Civil Aircraft (Panel), para. 7.1948; see EC – Large Civil Aircraft (AB), para. 1356.
9 EC – Large Civil Aircraft (Panel), para. 7.1948; see EC – Large Civil Aircraft (AB), paras. 1352-1353.
10 US SWS, paras. 526-547.

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very large aircraft. The EU argues that there are now seven distinct product markets, four of which
are monopoly markets, and one non-market. The EU does not – and cannot possibly – explain how,
in a few short years, fierce competition in the twin -aisle market has given way to a total absence of
any competition. The EU has given no valid reason to depart from the Appellate Body 's framework
consisting of three product markets.

12. The original Panel also found, and the Appellate Body upheld, that the subsidies that enabled
Airbus to launch the original A320 and A330 were genuinely and substantially linked to the
improved and derivative A320 and A330 aircraft that it was selling d uring the 2001-2006 period.11
Thus while the EU has presented an assortment of improvements to the A320 and A330 aircraft, it
fails to identify any real change in the fundamental conditions of competition in the LCA industry
such that the same causal link e stablished between subsidies and Airbus 's 2000 -2006 market
presence remains intact. Therefore, the evidence confirms that there is a genuine and substantial
link between the subsidies that Airbus has received and the current A320 and A330 models, and
that further investments by Airbus – including those since 2006 – do not eliminate that link.

13. Lastly, LA/MSF constituted a necessary precondition for Airbus's recent decision to launch the
A350 XWB. First, the A350 XWB program was not, as the EU argues, a can't-miss project immune
to the effects of LA/MSF. Rather, it was a project that faced, and continues to face, significant risks.
Second, EU support for the A350 XWB has been ever -present, from the period prior to the
program's launch, through the finaliz ation of the LA/MSF contracts, to the ongoing funding of its
development costs. Indeed, the A350 XWB program could not have gone forward as planned
without LA/MSF, including the effects of prior LA/MSF, without which Airbus would not have had the
financial, industrial, and technological attributes that it had when it launched the A350 XWB.
Finally, because Airbus would have been unable to proceed with the A350 XWB absent LA/MSF, the
EU's assertions about the viability, or attractiveness, of the project 12 are beside the point. However
rosy the A350's baseline sales projections might be,13 willingness must not be confused with ability;
wanting to market an aircraft means little without the means to do so. In short, the effects of prior
LA/MSF worked in combination with the latest round of LA/MSF to cause Airbus to launch and bring
to market the A350 XWB as and when it did, thereby becoming a genuine and substance cause of
serious prejudice to the U.S. LCA industry.

14. The United States has further demonstrated that adverse effects from LA/MSF and other
subsidies persist through the present. The United States has presented the Panel with evidence of
significant lost sales amounting to tens of billions of dollars in lost revenue for the U.S. LCA
industry, all caus ed by subsidies that enabled Airbus to offer and sell LCA that would have been
unavailable otherwise. 14 The United States has also presented the Panel with evidence of
displacement, impedance, and threat thereof, of its products, in the European Union marke t and 11
third-country markets.15 Airbus retains a product line that it likely would not have absent subsidies.
Now that product line is even stronger thanks to new infusions of LA/MSF that helped Airbus to
launch and market the A350 XWB. The A350 XWB and o ther Airbus LCA continue to take sales and
market share from Boeing, such that the United States continues to experience serious prejudice
that would not have occurred had the EU implemented the DSB 's recommendations and rulings and
complied with Article 7.8 of the SCM Agreement.

15. The EU has failed to provide a valid reason for departing from the Appellate Body 's product
market framework, and thus the U.S. displacement and impedance claims based on this framework
– single-aisle, twin-aisle, and very large aircraft – remain valid. The EU also has failed to provide a
valid reason for severing the causal connection between the subsidies and the aircraft sold by
Airbus, and thus the U.S. lost sales claims likewise remain valid. Finally, the EU has failed to
provide a sound reason for revisiting the non -subsidized like product rule that the Panel rejected in
the original dispute.

16. The Panel recalled that the original panel rejected the EU 's non-subsidized like product rule,
and that that decision was not a ppealed, and was therefore adopted by the DSB. Nevertheless, the
EU forges ahead with the same argument in this compliance proceeding. The EU 's alternative

11 EC – Large Civil Aircraft (Panel), para. 7.1934, 7.1940-41; see EC – Large Civil Aircraft (AB),
paras. 1270.
12 EU SWS, para. 1030.
13 Cf. EU SWS, para. 1030.
14 US FWS, Section VI.G.2; US SWS, paras. 673-709; and Exhibit USA-164.
15 US FWS, Section VI.H.3. and US SWS, paras. 718-747.

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strategy is to distort the original panel 's reasoning, ignoring that the Panel actually found that t he
EU's position had "no basis in the text " of the SCM Agreement. The EU should not be allowed to
reopen a settled issue, nor should it be permitted to divert the Panel 's attention from its unceasing
WTO-inconsistent subsidization of Airbus.

17. In conclu sion, the United States appears before the Panel because the situation has not
gotten better, it's gotten worse:

 The EU has refused to withdraw the subsidies.

 EU member States have provided additional LA/MSF to the A350 XWB.

 Airbus still supplies the market with a product line that it would not have without LA/MSF.

 Consequently, Boeing continues to lose sales and market share worth many billions of
dollars.

18. The United States was forced to begin this proceeding by the fact that after getting thes e
recommendations from the DSB, the EU has done nothing. Its intransigence has left us with no
other choice but to bring this issue back to the WTO dispute settlement system. It is clear now that
the EU will not comply with its obligations in the normal co urse of events. It is going to need the
impetus of another finding from another panel to do what they should have done the first time
around. Our request for you today is to quickly and forcefully validate the recommendations and
ruling of the DSB and find that the EU has failed to comply with its obligations. Thank you.

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ANNEX C
ARGUMENTS OF THE EUROPEAN UNION
Contents Page
Annex C-1 Executive Summary of the first written submission of the European Union C-2
Annex C-2 Executive Summary of the second written submission of the European Union C-9
Annex C-3 Executive Summary of the opening statement of the European Union at the
Panel meeting
C-14
Annex C-4 Executive Summary of the closing statement of the European Union at the
Panel meeting
C-19

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ANNEX C-1
EXECUTIVE SUMMARY OF THE FIRST WRITTEN
SUBMISSION OF THE EUROPEAN UNION
I. INTRODUCTION

1. The US First Written Submission in this case is remarkable for the extraordinary intensity of
forceful presumption reflected throughout, bot h with respect to what it contains, and with respect
to what it does not contain . It can be summarised in one line of overbearing assertion : the
European Union subsidised Airbus in the past; all subsidies (exc ept those granted by the
United States) are obj ectionable; nothing has changed; Airbus (or its products) should not exist;
all Airbus sales injure the United States; and this will always be so until Airbus (or its products)
cease to exist. This is hardly a recipe for finding a satisfactory settlement o f the matter, which is,
after all, the objective here.

2. Forceful presumption is not, of course, what these legal proceedings are about . Rather, they
are about a calm, meticulous, rational, reasonable, balanced and objective assessment of the law,
the e vidence (or lack of it) and the arguments (or lack of them) . The European Union will
demonstrate, in this First Written Submission, that the United States has failed to provide
arguments, evidence, or a legal framework sufficient to state valid claims in t hese compliance
proceedings.

II. THRESHOLD ISSUES

3. The European Union addresses several threshold issues, before addressing the individual
elements of the United States' claims.

4. First, we address the burden of proof. It is not controversial, and the United States does not
contest, that the complaining Member, the United States in this case, has the burden of proof in
these compliance proceedings, which proceed under the terms of Article 21.5 of the DSU and
Article 7.8 of the SCM Agreement . Indeed, i n SCM Agreement cases as in any other case, in
compliance proceedings, as in original proceedings, the burden of proof rests entirely with the
complaining Member, and there is nothing in Article 7.8 of the SCM Agreement, just as there is
nothing in Article 19.1 of the DSU, capable of justifying a different conclusion.

5. It is equally uncontroversial and uncontested that the Panel may not make the case for
either party. In order to make a prima facie case, the complaining Member must : make a claim;
assert facts; adduce evidence; and develop argument . The United States has failed to do so .
Absent a prima facie case, a panel must find in favour of the responding Member, without the
responding Member ever coming under any obligation to rebut a case that has not been made.

6. Second, we note the nature of the compliance obligation placed on the European Union in
this dispute. With respect to actionable subsidies, Article 7.8 of the SCM Agreement provides for
two compliance mechanisms: withdrawal (as in the cas e of Article 3.7 of the DSU) of the subsidy
or removal of the adverse effects.

7. These two compliance mechanisms operate independently, meaning that, if the
United States fails to demonstrate the existence of a subsidy, taking into account the facts rel ating
to withdrawal, it has failed to demonstrate non -compliance. Alternatively, if the United States fails
to demonstrate the existence of presently arising and presently caused adverse effects, it has
failed to demonstrate non -compliance. These two compl iance mechanisms also operate
cumulatively, meaning that, if the European Union has complied by withdrawing a subsidy, that
subsidy cannot play any part in an assertion or finding of non-compliance, based on allegedly
presently caused and presently arising adverse effects . Alternatively, if the United States does
succeed in demonstrating subsidies, but only of a smaller magnitude and/or greater age, the Panel
must consider if the United States has demonstrated that this different basket of subsidies
presently causes presently arising adverse effects . The United States has failed to consider or
address these factors.

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8. Third, we address the concept of "withdrawal", in Article 7.8 of the SCM Agreement .
Withdrawal of either the financial contribution or the b enefit entails withdrawal of the subsidy . A
subsidy may be withdrawn or cease to exist for example through repayment of principal and
interest, alignment with a market benchmark, or extinction and extraction . Affirmative action is
not always required in or der for a subsidy to be withdrawn or to cease to exist; a subsidy can be
"withdrawn" through the passage of time . In such a case, the complaining Member can no longer
demonstrate that the responding Member is "granting or maintaining" a subsidy under Article 7.8,
and the responding Member has "otherwise" complied with the recommendation, within the
meaning of Article 22.2 of the DSU . The United States has failed to consider or address these
factors.

9. Fourth, we note that the United States must demonstrat e presently arising adverse effects
during a period following 1 December 2011, and must demonstrate a present genuine and
substantial relationship of cause and effect with respect to presently arising adverse effects during
the same period, taking into acc ount intervening events (non -attribution factors) . The United
States has failed in this regard.

III. THE US CHALLENGE INCLUDES MEASURES AND CLAIMS THAT ARE OUTSIDE OF
THE COMPLIANCE PANEL'S JURISDICTION

10. The US attempt to force certain financing agree ments relating to the A350XWB into these
compliance proceedings, notwithstanding the absence of any overarching programme, and in
direct breach of the EU 's due process rights, must be rejected . Additionally, the United States
cannot presume to resurrect, i n these compliance proceedings, export subsidy and domestic
content claims that it lost or abandoned in the original proceedings . Moreover, the United States
cannot presume to introduce threat claims that are nowhere to be found in its compliance panel
request.

11. The European Union requests that the Panel find that none of the four separate A350XWB
financing agreements is a "measure{} taken to comply " within the meaning of Article 21.5 of the
DSU, and that they are therefore outside the scope of the Panel's jurisdiction.

12. The European Union further requests that the Panel find that the US claims that the four
A380 financing agreements violate Articles 3.1(a) and (b) of the SCM Agreement are likewise
outside the scope of the Panel 's jurisdiction under Article 21.5 of the DSU, for two primary
reasons: first, those claims do not relate to any "measures taken to comply "; and, second, no
element of the "recommendations and rulings" of the DSB relates to Articles 3.1(a) and (b) of the
SCM Agreement, or obliges the European Union to withdraw the measure pursuant to Article 4.7 of
the SCM Agreement.

13. In addition, the European Union requests the Panel to find that the US Panel Request fails to
satisfy the requirements of Article 6.2 of the DSU, as the Unit ed States is attempting to advance
legal claims in its First Written Submission related to the alleged threat of displacement and
impedance of imports pursuant to Article 6.3(a) of the SCM Agreement, that are not covered by
the legal summary in the US Panel Request.

IV. ALLEGED SUBSIDIES

14. The United States cannot presume to ignore the express terms of Article 7.8 of the SCM
Agreement, which give the responding Member the option to comply by withdrawing the subsidy,
that is, by removing either the financial contribution or the benefit. A benefit may, in turn, cease
to exist (i) where the Member that granted the financial contribution modifies its terms and
conditions such that, going forward, it is aligned with a market benchmark and, hence, no longer
confers a benefit, or (ii) where, through the passage of time, the subsidy ceases to confer a
benefit on the recipient . In this context, the United States cannot presume to ignore repayments
of principal and interest, alignment with a market benchmark, exti nction, extraction or
amortisation.

15. In EC – LCA, the Appellate Body found that the "removal of the financial contribution "
results in the "life" of a subsidy coming "to an end ".1 This is consistent with the definition of a

1 Appellate Body Report, EC – Large Civil Aircraft, para. 709.

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subsidy in Article 1.1 of the SCM Agreement, which includes a "financial contribution" as one of the
constituent elements of a subsidy . The complete removal of a financial contribution from a
recipient brings the subsidy to an end.

16. In its First Written Submission, the United S tates has failed to demonstrate the existence of
subsidies, taking into account the EU compliance measures, which address repayments of principal
and interest, alignment with a market benchmark, extinction, extraction and amortisation.

17. With respect to repayment of principal and interest , the United States has not established
that the financial contributions under a variety of the subsidies found in the original proceedings
exist, despite the fact that the principal and interest due under the relevant a greements has been
fully repaid, such that it has failed to establish an essential element of its prima facie case.
Recalling that the burden of proof to establish these elements falls on the United States, the
European Union establishes the circumstances that have led to the full repayment of principal and
interest due under a series of UK, Spanish and French MSF agreements at issue in the original
proceedings.

18. With respect to modification of the terms and conditions of measures adopted as part of the
EU measures taken to comply, the United States has failed to establish that the recipient enjoys
the financial contribution on terms and conditions that are more favourable than those available to
the recipient at market . Specifically, with respect to th e lease agreement for the land in the
Mühlenberger Loch in Hamburg, the United States has failed to demonstrate that the terms and
conditions, as amended through the EU 's measure taken to comply, confer a "benefit". The same
principles apply with respect to the amended take-off and landing fees at Bremen airport.

19. With respect to amortisation, we recall the Appellate Body 's statements that the life of a
subsidy comes to an end, and its benefit expires, over a period of time that must be determined ex
ante.2 For the vast majority of the subsidies implicated by the original proceedings, the benefits
have expired and the subsidies have reached the end of their lives . It is for the United States to
establish that these subsidies exist after 1 December 2011, in light of the Appellate Body 's
statements, and in light of the significant time that has passed since the grant of the many of
these measures. Yet, the United States fails to even address the matter . Keeping in mind that the
burden rests with the United States, the European Union provides evidence establishing that the
lives of the vast majority of the MSF, regional development and capital contribution measures at
issue in the original proceedings have come to an end.

20. With respect to extraction and extinction, the Appellate Body has confirmed that
"intervening events " such as cash extractions and share transactions serving to extract or
extinguish subsidy benefits may bring a subsidy to an end. 3 In light of the guidance provided by
the Appellate Bod y, the European Union addresses a series of such intervening events which
demonstrate that the United States has failed to establish the existence of current adverse effects
from subsidies allegedly maintained after the end of the implementation period.

V. ALLEGED PROHIBITED SUBSIDIES

A. ALLEGED CONTINGENCY ON EXPORT PERFORMANCE

21. The United States attempts to re -iterate its original de facto export subsidy claims with
respect to French, German, Spanish and UK financing for the A380 . The United States also makes
new claims with respect to French, German, Spanish and UK financing for the A350XWB . Grouping
all of the measures together without distinction, the United States asserts that export contingency
arises, because the "grantors" of financing anticipated exports, and because the "anticipated ratio"
of domestic to export sales with the financing allegedly exceeds the "baseline ratio" that would be
achieved by a hypothetical profit-maximising firm without subsidy.

22. The US claims fail . The United Sta tes' characterisation of this mechanistic approach as
constitutive of a "test" set out by the Appellate Body is inaccurate . The US approach does nothing
to explain why the design, structure and modalities of operation set out in the measure , assessed
in th e context of the total configuration of facts constituting and surrounding the grant,

2 Appellate Body Report, EC – Large Civil Aircraft, paras. 706, 707, 709, 710, 713, 1236.
3 Appellate Body Report, EC – Large Civil Aircraft, paras. 709, 710, 725, 745, 1236.

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demonstrate that the alleged subsidies are geared to induce the promotion of future exports by
the recipient, which is the standard repeatedly described by the Appellate Body.4 The
United States does not explain how its "evidence" demonstrates that the financing agreements at
issue induced Airbus to prefer an export over a domestic sale , in ways that are not simply
reflective of the conditions of supply and demand in the domestic and export markets.

B. ALLEGED CONTINGENCY ON THE USE OF DOMESTIC OVER IMPORTED GOODS

23. The United States alleges that French, German, Spanish and UK financing for the A380 and
the A350XWB was, in each case, granted in exchange for a commitment by Airbus to locate a fixed
share of the total development or production work for the aircraft in the relevant country .
Specifically, the United States asserts that these "… LA/MSF agreements confirm that the granting
of the subsidy was made contingent – in fact and in law – upon the location of certain specific
production within specific EU member States, and/or the use and maintaining of certain EU jobs ".5
The United States submits that, by definition, this means that Airbus must use domestic
components and not imports, or in other words that the subsidies exclusively benefit domestic
producers.6

24. Assessing each of the financing agreements individually, the European Union explains that
the US arguments merely demonstrate that the investment is in a French, German, Spanish or UK
firm, that is, one that will develop and produce the aircraft and have a minimum of activities and
employment in France, Germany, Spain or the UK . An employee is not a good . Furthermore,
neither domestic development nor prod uction is to be equated with "the use of domestic over
imported goods ". Thus, the financing agreements to which the United States refers do not
demonstrate that the subsidy is conditioned upon the use of domestic over imported goods.

VI. ALLEGED ADVERSE EFFECTS

25. The United States has not established that there exist, at present, any subsidies .
Accordingly, the EU adverse effects arguments are in the alternative only . The United States has
failed to establish a number of threshold elements to sustain its claims of adverse effects:

26. First, Article 7.8 of the SCM Agreement precludes the United States from attempting to
establish present adverse effects from withdrawn subsidies . Second, the United States fails to
demonstrate that alleged present subsidies from the financing agreements may be aggregated.

27. Third, the United States fails to demonstrate that, following the EU measures taken to
comply, there remain subsidies that, at present, cause adverse effects presently arising (after the
end of the implementation period on 1 December 2011) given "current factual conditions ".7
Fourth, the United States fails to establish its adverse effects claims based on "markets", whose
geographical, product and temporal scope are supported by evidence.

28. Fifth, the United States fails to demonstrate a present causal link by taking into account
previous causal links no longer existing today, or that are too remote through the passage of time
and the effects of intervening causes and other non -attribution factors. Sixth, the United States
fails to demonstrate that its "like products" are "non-subsidised". Neither the United States nor the
compliance Panel may ignore the established fact that the alleged U.S. "like products" are heavily
subsidised. Seventh, the United States fails to demonstrate that any cumulation of adverse effects
is warranted.

A. ALLEGED ADVERSE EFFECTS RELATED TO THE A320 FAMILY LCA

29. The subsidies that were found to have caused Airbus to launch the A320 family LCA as and
when it did, ha ve been withdrawn in full . Thus, the European Union addresses the US adverse
effects arguments relating to the A320 family solely in the alternative.

4 Appellate Body Report, EC – Large Civil Aircraft, paras. 1044, 1063, 1067, 1084, 1086, 1101.
5 US FWS, para. 239. See also Id., paras. 202, 203, 209, 213, 218, 219, and Title V.B.3.
6 US FWS, paras. 203, 219, and Title V.B.2.a.
7 Panel Report, US – Upland Cotton (Article 21.5 – Brazil), paras. 10.104 and 10.248 (emphasis
omitted).

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30. First, the United States fails to recognise that A320 family LCA aircraft compete in two
different m arkets. Recently, both Airbus and Boeing made very substantial technological
enhancements to their existing single -aisle LCA – in the form of Airbus ' A320 new engine option
("A320neo") launched in December 2010 and Boeing 's 737MAX launched in August 2011 . The
modifications applied to the previous A320 and 737NG family LCA mean that there is extremely
limited competition between the presently -delivered aircraft and these presently marketed
improved aircraft.

31. Second, the withdrawal of subsidies related to the launch and production of the A320
creates a significant burden for the United States to establish A320 -related lost sales and
displacement claims, as the United States has claimed no new subsidies for the A320 . Third, even
if none of the original A3 20 subsidies are withdrawn, the United States fails to address evidence
that these decades old subsidies no longer cause genuine and significant present adverse effects.

32. Fourth, the A320 "product" launched in 1984 is not the same product sold and deli vered by
Airbus in 2012 . Since its launch, there have been massive and ongoing private investments into
the A320 programme by Airbus and its suppliers, resulting in significant technological
modifications and production improvements between 1995 and 2008 . Additional significant
investments and changes are in the process of being implemented to the A320 family LCA,
including those related to the "Sharklet" and A320neo, which have led to significant sales since
2009. Absent its investments, Airbus would no lo nger be able to compete against the improved
Boeing 737NG, let alone the new 737MAX . Cumulatively, these investments and the resulting
product and production enhancements are the "substantial" causes for Airbus' present and future
sales and deliveries of its A320 family LCA – not any alleged remaining A320 subsidies.

33. With respect to US lost sales claims, Airbus ' present sales of the original A320 and A320neo
are secured by significant product and production enhancements, not by the effect of any non -
withdrawn subsidies. There is no basis for US allegations of present effects from sales Boeing 's
737NG lost during the 2001 -2006 reference period, because all such sales have now been
delivered. The US failure to challenge 2001 -2006 sales to other Airbus customers precludes any
presumption that undelivered follow -on orders by such other customers constitute present lost
sales. And US claims that hundreds of A320neo orders caused lost sales to the 737NG fail to
recognise that the A320neo is not in the same market as the 737NG.

34. Regarding US claims of displacement or impedance, there is no jurisdictional basis for the
US claim of threat of displacement or impedance in the EU market . On the substance, the US
claims of impedance and displacement fail to evalu ate 2012 market share data, erroneously rely
on historical delivery trends not reflecting present market shares and deliveries, ignore the
absence of displacement, identify no reliable or discernible trends, and fail to establish how
historical, unchallenged sales of the A320 family LCA presently impede deliveries of 737NG.

B. ALLEGED ADVERSE EFFECTS RELATED TO THE A330 FAMILY LCA

35. The subsidies that were found to have caused Airbus to launch the A330 family LCA, as and
when it did, have been withdraw n in full . Thus, the European Union addresses the US adverse
effects arguments relating to the A330 family solely in the alternative.

36. First, the United States fails to recognise that the A330 family LCA aircraft compete in
conditions that give them a virtual temporal monopoly for smaller twin -aisle aircraft that are
available for near -term delivery . The competitive realities place the A330 in a market separate
from most other twin -aisle aircraft and are a key non -attribution factor to consider in eva luating
US lost sales and displacement or impedance claims.

37. Second, the withdrawal of A330-related subsidies creates a significant burden for the United
States to overcome, as the United States challenges no new subsidies for the A330 . Third, even if
none of the original A330 subsidies are withdrawn, the United States fails to address evidence
regarding the passage of considerable time.

38. Fourth, the United States fails to recognise that the A330 launched in 1987 is not the same
product that is bei ng sold, and delivered, by Airbus in 2012 . Since the subsidised development of
the A330, there have been massive and ongoing private, non -subsidised investments to the

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aircraft by Airbus and its suppliers . These investments have increased the maximum take -off
weight and range of the A330, resulting in significant present market demand.

39. By contrast, Boeing made no significant investments to enhance the performance and
operating efficiency of the 40 -year-old 767. The 767, or Boeing's 777, are too large a nd heavy an
LCA to be attractive to airlines seeking a smaller, economically -efficient twin-aisle aircraft with a
medium range . And the 787 has been plagued by delivery delays and a huge order backlog
precluding the availability of any near-term delivery slots. Thus, the genuine and substantial cause
of any present Airbus sales and market share related to the A330 sales are Airbus ' timely and
significant investments in upgrading the range and take -off weight and reducing the operating
costs of the A330 – not the effects of any remaining, decades-old subsidies related to the A330.

40. Turning to the US lost sales claims, the United States offers no explanation for claiming such
lost sales today when it made no such allegations during the 2001 -2006 reference period. Nor
does the United States address the fact that the A330 is not in the same market as the 777, that
Airbus secured A330 sales based on strong airline preference for the A330 from airlines that
require a smaller twin-aisle aircraft with a more medium range, and that continued low sales of the
767 are due to Boeing's failure to invest in upgrading the aircraft's 40-year-old technology.

41. The US displacement or impedance claims fail because they are based on distorted market
share tables that imp roperly combine deliveries spanning a number of twin -aisle aircraft product
markets, and ignore that the A330 is not in the same market as other twin -aisle aircraft. The US
third country impedance claims ignore the absence of displacement, are not based on any relevant
market trends, and fail to explain how historical, non -challenged sales of A330 LCA presently
impede 767 and 777 deliveries.

C. ALLEGED ADVERSE EFFECTS RELATED TO THE A380 FAMILY LCA

42. For the A380, the United States fails to demonstrate present adverse effects that are
presently caused after the end of the implementation period . Again, the United States fails to take
account of the withdrawal of pre -A380 subsidies that the original panel found were the principal
cause of any lost sales existing in the 2001-2006 reference period.

43. In the alternative, the United States fails to establish that any allegedly remaining subsidies
benefiting the development and production of the A380 (financing from France, Germany, Spain
and the UK, or reg ional development grants) are sufficient to constitute a present genuine and
substantial link to the alleged present adverse effects . This is particularly critical because the
original panel did not find that Airbus could not have launched the A380, as and when it did,
without A380 MSF and without the regional development grants.8

44. Even without the A380 -related subsidies, EADS would have had funds sufficient to finance
the development of the A380 . Moreover, the A380 business case would also have been vi able
absent MSF for the A380 . In these circumstances, any existing subsidies benefiting the A380 are
not a substantial cause of its launch and, thus, are not a substantial cause of any alleged adverse
effects presently arising.

45. Any adverse effects fro m the US A380 -related lost sales claims arising from the 2001 -2006
reference period are removed by deliveries . The US lost sales claims fail because the 747 -8 and
A380 operate in separate markets, and because the United States ignores the very particular
demands and needs of particular airlines for the operating, performance, revenue -generating and
cost-savings attributes of the A380, compared to any Boeing LCA (and the 747-8 in particular).

46. US claims of displacement or impedance also fail because the A380 and 747 -8 are in
different markets, and in any event, there are no identifiable or reliable trends due, in part, to
production and development delays for the 747 -8. US claims of impedance suffer from a lack of
any identifiable or reliable trends or a ny evidence that airlines demand particular attributes of
Boeing LCA compared to the A380.

8 Panel Report, EC – Large Civil Aircraft, para. 7.1948.

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D. ALLEGED ADVERSE EFFECTS RELATED TO THE A350XWB FAMILY LCA

47. For the A350XWB, the United States fails to demonstrate that financing agreements for the
aircraft are properly within the scope of these compliance proceedings, or that these loans
constitute subsidies. On the basis of these infirmities alone, the compliance Panel could reject the
US adverse effects claims relating to the A350XWB.

48. In the alterna tive, the US fails to establish a genuine and substantial causal link between
financing for the A350XWB and any alleged present adverse effects, through the alleged product
launch effect of the subsidies on the existence of the A350XWB . In particular, Airbus committed to
the launch of the A350XWB, and began its development, accepted orders and signed up risk -
sharing and other suppliers two and a half years before the signature of the first financing
agreement. Moreover, EADS would have had the funds to fina nce the development of the
A350XWB, even without the financing agreements for the A380 and the A350XWB.

49. Finally, the European Union establishes the dramatic technological differences between the
A380 and the A350XWB, rebutting the US assertions that t he aircraft benefited significantly from
developments that Airbus implemented on its A380. In these circumstances, there is no basis for a
finding of a presently existing causal link.

50. Moreover, there is no basis for US lost sales claims involving the A350XWB based on
contractual settlements and conversions to that aircraft by airlines that had ordered the later -
cancelled original A350 . Since the United States has not challenged these sales in the original
proceedings, there is no legal basis for it to challenge them now in these compliance proceedings .
US lost sales claims related to the A350XWB also fail because the United States fails to take into
account the existence of several twin -aisle markets and the distinctive demands of customers for
particular types of large and smaller twin -aisle LCA that significantly limit competition between
these aircraft.

51. Finally, the European Union notes that, presently, there have been no deliveries of
A350XWB LCA . Consequently, there can be no present displaceme nt or impedance based on
present deliveries of A350XWB LCA . And since the United States has not raised (and cannot now
do so) a threat of displacement or impedance, the Panel should reject the US displacement and
impedance claims relating to the A350XWB.

E. ALLEGED ADVERSE EFFECTS RELATED TO THE A300, A310 AND A340 FAMILY LCA

52. With respect to the A300, A310, and A340, the subsidies that caused the launch of these
aircraft, as and when they were launched, are fully withdrawn, such that the United State s has
secured the remedy it is due, and no assessment of any alleged present adverse effects is
warranted. In any event, it is difficult to understand how any adverse effects could accrue to US
interests from any existing subsidies for these three LCA prog rammes, since Airbus no longer sells
nor delivers A300, A310 or A340 LCA and has, in fact, terminated these LCA programmes.

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ANNEX C-2
EXECUTIVE SUMMARY OF THE SECOND WRITTEN
SUBMISSION OF THE EUROPEAN UNION
I. INTRODUCTION
1. In Section II, the EU reca lls the legal framework governing these proceedings, including, in
particular, the question of the burden of proof. In Section III, the EU addresses the scope of these
proceedings. Section IV addresses the US failure to establish the existence of subsidies after the
end of the implementation period, in light of EU measures taken to comply. Section V rebuts the
US claims of prohibited subsidies. Section VI addresses the US failure to establish present adverse
effects presently caused after the end of the implementation period.
II. THRESHOLD ISSUES
2. In its SWS, the US continues to shrug off its burden of proof. The US continues its failure to
demonstrate present subsidies, as well as presently arising adverse effects presently caused.
III. THE US CHALLENGE INCLUDES MEASURES AND CLAIMS THAT ARE OUTSIDE OF THE
COMPLIANCE PANEL'S JURISDICTION
3. None of the A350XWB financing agreements challenged by the US is a "measure{} taken to
comply", such that they are outside the scope of the Panel 's jurisdiction under Article 21.5 of the
DSU. The US claims against the four A380 financing agreements under Articles 3.1(a) and (b) of
the SCM Agreement are likewise outside the scope of the Panel 's jurisdiction. Finally, the US Panel
Request fails to satisfy Article 6.2 of the DSU; the US Panel Request does not cover claims
concerning an alleged threat of displacement and impedance of imports pursuant to Article 6.3(a)
of the SCM Agreement.
IV. ALLEGED PRESENT SUBSIDIES
4. Article 7.8 of the SCM Agreement affords an impleme nting Member the option to withdraw
the subsidy, or to take appropriate steps to remove adverse effects. By 1 December 2011, the EU
had procured withdrawal of most of the subsidies covered by the recommendations and rulings of
the DSB, taking heed of the Appellate Body's statement that a subsidy is brought to an end "either
through the removal of the financial contribution and/or the expiration of the benefit ". Certain
subsidies were withdrawn through removal of the financial contribution; certain subsidies were
withdrawn through expiration or cessation of the benefit; and, withdrawal of some subsidies was
accomplished through both of these means.
A. Horizontal issues
5. First, Article 7.8 permits a respondent to achieve compliance by, inter alia, withdrawing the
subsidy. In proceedings implicating Article 7.8, a fundamental question is whether "subsidies that
the DSB has already found to exist ", indeed exist after the end of the implementation period, in
light of, inter alia, any "measures taken to comply". If the complainant fails to establish, in light of
the respondent 's measures taken to comply, that the subsidies exist after the end of the
implementation period, then it has failed to demonstrate that withdrawal has not occurred.
6. Second, the US asser ts that unless all subsidies have been withdrawn, the withdrawal of
some subsidies is not relevant under Article 7.8. The US errs. "Subsidy" is a defined term,
consisting of three elements set out in Article 1 of the SCM Agreement. The existence of subsidies
is not established "collectively", but is instead a matter of establishing these three elements, for
each measure, individually. When Article 7.8 affords the option to comply by withdrawing "the
subsidy", the term bears the meaning set out in Article 1. Thus, the EU is entitled to comply by
establishing, inter alia, that it has withdrawn one or more of the constituent elements leading to a
finding, in the original proceedings, that a given measure pursued by the US was a "subsidy".

- C-10 -

7. Third, and recalling Appellate Body statements that withdrawing the subsidy or removing the
adverse effects will "usually" or "normally" involve affirmative action by the respondent, the US
argues that the EU may not rely on the passage of time to establish withdrawal (beca use the
benefit has expired, or the life of the subsidy has otherwise come to an end). The US errs. The
Appellate Body's statements beg the question whether the temporal features of this dispute are
"usual" or "normal". The role the passage of time "usually" or "normally" plays in assessing
compliance under Article 7.8 must be assessed in the specific temporal context in which it arises.
Here, the US challenged subsidies that were provided up to 43 years ago. Moreover, the Appellate
Body also stated that a subsidy has a "finite life", which "accrues and diminishes over time " and
"comes to an end". The EU has provided an expert report using established methodologies charting
the accrual and diminishment of the subsidies at issue over time.
8. Fourth, the US asserts that events marking the end of a subsidy 's life that arise "before the
finding of WTO inconsistency cannot satisfy the EU 's obligation to withdraw the subsidies ". The US
errs. Panels and the Appellate Body have expressly ruled that "measures taken to comply" may be
taken before a finding of WTO inconsistency is adopted by the DSB. The Appellate Body has found
that "compliance with the recommendations and rulings of the DSB can be achieved before the
recommendations and rulings of the DSB are adopted".
B. Termination of instruments providing the terms of subsidies
9. Termination of an instrument is an additional piece of evidence, even if not necessary or
sufficient in and of itself, constituting recognition by the parties of withdrawal (or cessation o f
adverse effects). As such, the EU does not accept, as the US suggests, that terminations of loan
agreements are irrelevant. The EU additionally notes that certain of the terminations listed by the
US, while not accompanying withdrawal of the subsidy by v irtue of repayment of principal and
interest of the underlying loans, still accompany withdrawal of the subsidy, albeit by means other
than repayment.
C. Repayment of principal and interest
10. The Appellate Body found that the "removal of the financial contribution" results in the "life"
of a subsidy coming "to an end ". The EU has established that the principal of a series of EU
member State loans, plus the interest due, has been repaid, such that the financial contributions
were returned, and the life of the subsidies brought to an end. Thus, the US has failed to
demonstrate the existence of the subsidies at issue after the end of the implementation period,
because they have been withdrawn. The US argues that, to make the removal of the financial
contribution meaningful, the repayment effected would have to remove the "benefit" element of
subsidy. However, arguing that effecting repayment of principal and interest does not remove the
"benefit" of the MSF loans relative to market is, however, a response to an argument the EU has
not made.
D. Amortisation
11. The US takes a number of erroneous legal positions and makes unsupported factual
assertions regarding the amortisation of subsidies – or in other words, the ex ante trajectory of the
life of the subsidi es, or the accrual and diminishment of the subsidies over time. The EU
demonstrates that, contrary to the US assertion, the original panel made no findings regarding
present subsidisation during the original reference period. The EU then rebuts the US asse rtion
that amortisation is not relevant under Article 7.8 to assess whether a subsidy has been
"withdraw{n}". Next, the EU addresses erroneous US arguments regarding the ex post , rather
than ex ante, determination of an amortisation period, and the relevance of the actual terms of the
subsidies for establishing their amortisation period. Finally, the EU addresses a number of
additional errors in the US amortisation arguments for specific subsidies. In summary, the US has
failed to establish that, in light o f amortisation, the subsidies exist after the end of the
implementation period and have not been withdrawn.
E. Extinction and extraction
12. The US does not dispute that the "extinction events " are properly before the Panel, but
asserts that the "extraction events" were rejected and are not properly before the Panel. The US

- C-11 -

errs. Under Article 21.5, there is a disagreement between the Parties "as to the existence " of a
measure taken to comply (the cash extractions), and "as to the consistency" of that measure with
a "covered agreement ", namely Article 7.8. Moreover, the Appellate Body did not resolve the
question whether the cash extractions remove "all or part of a subsidy", but said it is a question to
be dealt with by a compliance panel. Thus, both the ex tinction and extraction events are properly
before the Panel.
13. Turning to the substance, the EU has established that the cash extractions removed value.
Specifically, the value of the German and Spanish assets received by EADS upon its creation was
lower than the value of the assets held by DASA and CASA respectively prior to the transaction.
Moreover, the EU has explained how the subsidies were reflected in the companies ' balance
sheets, and how the cash extractions removed the remaining value of the su bsidies by reducing
the companies' net asset value, which reflected, indirectly, the value of these subsidies.
14. With respect to the share transactions, the US asserts that the EU "relies on an incorrect
legal test" and that "the facts at issue do not s atisfy the correct test ". Both assertions are wrong.
First, the Appellate Body set out three criteria to establish the presumption that a transaction
extinguishes the residual value of subsidies, despite the US attempt to add an additional criterion.
Moreover, all three share transactions at issue meet the three criteria; as the US has not provided
evidence to rebut the resulting presumption, the Panel should find that the three transactions
extinguish the residual value of the subsidies. Accordingly, the U S has failed to establish the
existence of the subsidies, which have been withdrawn.
F. A350XWB financing agreements
15. The US claims that financing agreements concluded between Airbus and France, Germany,
Spain and the United Kingdom in relation to the A350XWB are subsidies that are prohibited, and
that cause adverse effects. However, the US has failed to establish that the agreements confer
"benefits", under Article 1.1(b) of the SCM Agreement. The US has abandoned its argument that
the A350XWB loans co nfer benefits because they allegedly represent an instrument not otherwise
available at market. Moreover, in assessing the terms of the loans, the US improperly understates
the rates of return implied in the loan agreements, and provides a flawed benchmark that it
inaccurately ascribes to Professor Whitelaw, and that overstates required market rates of return.
V. ALLEGED PROHIBITED SUBSIDIES
A. The United States has not demonstrated the existence of any subsidy contingent in fact
upon anticipated export
16. The US asserts that French, German, Spanish and UK financing for the A380 and the
A350XWB are subsidies contingent in fact upon anticipated export. The US compares the
anticipated ratio of domestic to export sales with the subsidy, to a "baseline" ratio of domestic to
export sales that would be achieved by a hypothetical profit -maximising firm without subsidy, and
concludes that changes in the ratios demonstrate that the financing agreements for the A380 and
the A350XWB must be subsidies contingent in fact upon anticipated export.
17. The EU establishes that the ratios calculated by the US are riddled with errors, and do not
represent what the US asserts they represent. The errors in the US approach are more
fundamental, however. The US presents its argume nts as if it were simply a question of providing
"the final piece of evidence " or "filling the gap " in order to "confirm" an inconsistency. This is
untrue. In the original proceedings, the Appellate Body reversed the legal standard adopted by the
panel, sw eeping away the prior associated US legal argument. Consequently, the US must
demonstrate export contingency, and not just fill in a "final piece " of or gap in the evidence
allegedly remaining after the original proceedings.
18. The Appellate Body clarifie d that: (i) mere anticipation of exports is not sufficient to
demonstrate contingency; (ii) the analysis must focus on the design, structure and modalities of
operation set out in the measure , assessed in the context of the total configuration of facts
surrounding the grant; (iii) nothing in the design, structure and modalities of operation set out in
the financing agreements demonstrates or supports the existence of export contingency; and (iv)
nothing in the other evidence demonstrates or supports the existence of export contingency.

- C-12 -

19. Notwithstanding this guidance, the US attempts to pursue its claims by mischaracterising
the Appellate Body 's "indicative", "illustrative" "numerical examples " as a "test", re -iterating
assertions about "anticipation", re-cycling evidence that has already been considered and rejected,
and by relying upon "baseline ratios " that are defective in several respects. This mechanistic
approach leads the US to the absurdly implausible proposition that any benefit in the financing
agreements was anticipated to cause and in fact caused foreign airlines to massively increase their
demand (which is in fact driven by their customer base and generally higher demand growth in
non-EU markets). As in the original proceedings, the latest US argument does nothing to
demonstrate why the granting of the subsidy might be considered geared to induce the promotion
of future export performance by the recipient, in a way that is not simply reflective of the
conditions of supply and demand in the domestic and export markets.
B. The United States has not demonstrated the existence of any subsidy contingent, in law or
in fact, upon the use of domestic over imported goods
20. The US brings claims of subsidies contingent in fact upon the use of domestic ov er imported
goods with respect to French, German, Spanish and UK financing for the A380 and the A350XWB.
According to the US, in each case the financing was "granted" "in exchange for a commitment " by
Airbus to locate a fixed share of the total development or production work for the aircraft in the
relevant country. The US argues that the financing agreements thus require Airbus to produce
specific "sub-assemblies and components " or "parts" in the territory of the EU, which accordingly
become "domestic products" of the EU, and then use those "domestic products" as "manufacturing
inputs" in the production of the finished aircraft.
21. Article 3.1(b) of the SCM Agreement requires the contingency to be demonstrated with
respect to the "use of domestic over impo rted goods ". Thus, the term "use of … goods "
circumscribes what is prohibited. The Agreement does not use the terms "development" or
"production". Accordingly, a subsidy contingent upon domestic development or production is not
prohibited. Such a subsidy m ight or might not have adverse effects on imported goods; however,
if within the scope of the SCM Agreement , that is a matter to be addressed under Part III.
Members are not prohibited from tying their subsidies to domestic production, that is, granting
them exclusively to domestic producers; they must only ensure that such subsidies do not cause
adverse effects to the interests of other Members.
22. This feature of subsidies law is enshrined in the text of the GATT 1994, as interpreted in the
SCM Agreemen t. In particular, Article III:8(b) is essential context for understanding the proper
scope of Article 3.1(b). In exercising its rights under Article III:8(b), it is for the granting Member
to select the domestic producers (that is, the firms producing part icular goods) to be subsidised.
Thus, if a Member merely grants a subsidy (for example to an aircraft producer), and in doing so
restricts it exclusively to a domestic producer, declining to grant it to foreign producers, it benefits
from the safe harbour of Article III:8(b), as interpreted in the SCM Agreement , and does not
violate Article 3.1(b). Such a subsidy might influence the location of a firm (as permitted by
Article III:8(b)), but, taking the location of the firm as a given, it does not create a m echanism
that incentivises or favours a substitution of imported inputs with domestic inputs.
23. Article 3.1(b) does not address subsidies where the product that receives the subsidy is the
same as the good that it is alleged must be used; nor where the producer of a downstream
product that receives the subsidy is the same as the producer of the upstream good that it is
alleged must be used. A firm uses an input; it does not use an output; and the same thing cannot
be, at the same time and for the same firm, both an input and an output. It can only be one or the
other. Nor can the producer of the downstream and upstream products be the same, because in
that case there is simply no relevant input. To construe Article 3.1(b) in the manner argued for by
the US is to trespass on the domain of Article III:8(b).
VI. ALLEGED PRESENT ADVERSE EFFECTS
24. The US claims that the EU allegedly failed to remove the adverse effects, within the meaning
of Article 7.8. At the outset, the EU recalls that these claims must f ail for lack of evidence of any
present subsidisation, as discussed in Section IV, above. The US has failed to demonstrate that
any of the subsidies exist after the end of the implementation period, and are not withdrawn. In
these circumstances, compliance has been achieved; under Article 7.8, there is no basis for the

- C-13 -

compliance Panel to find present adverse effects from subsidies that have been withdrawn, and for
which compliance has been achieved.
25. Should the Panel find that there are present subsidie s, the EU also explains that the US has
failed to establish the existence of present adverse effects, presently caused by such subsidies
after the end of the implementation period. Specifically, the US has failed to establish a present
genuine and substant ial causal link for each of the Airbus products for which it raises adverse
effects claims:
With respect to the A320 and A330, the US has failed to demonstrate a present and
substantial causal link between any presently existing subsidies and alleged pre sent adverse
effects, given, in particular, its failure to consider the passage of considerable time since the
grant of the subsidies, during which Airbus made significant non -subsidised investments in
the A320 and the A330.
With respect to the A380, th e US erroneously relies on the effects of withdrawn pre -A380
subsidies to try to establish a present causal link, and ignores evidence demonstrating that
EADS and Airbus could and would have launched the A380 absent EU member State
financing for the A380.
With respect to the A350XWB, the US has failed properly to account for the fact that the
financing agreements were not concluded until well after Airbus had launched, partially
developed and accepted 500 orders for the aircraft. Moreover, the evidence es tablishes that
the A350XWB was economically viable without the financing agreements, that compelling
strategic considerations would have led EADS and Airbus to launch the programme without
those agreements, and that the companies had the financial means to fund launch and
development absent those agreements. Finally, the evidence establishes that any remaining
effects from any allegedly non -withdrawn pre -A350XWB subsidies are insufficient to
establish a substantial causal link due to the dramatic technologi cal differences between the
A350XWB and prior Airbus aircraft.
With respect to the A300, A310 and A340, it is difficult to understand how any adverse
effects could accrue to US interests, since Airbus no longer sells nor delivers these LCA, and
has terminated the programmes.
26. In addition, the specific failures in the US lost sales claims are legion, including, notably, its
failure to account for non -attribution factors affecting groups of and individual sales, which make
any causal link non -substantial. Similarly, the US has failed to raise present displacement and
impedance (or threat thereof) claims based on properly established product markets, has failed to
establish the required present trends in the flawed product markets it does identify, and has
ignored non-attribution factors that affect the markets at issue.

- C-14 -

ANNEX C-3
EXECUTIVE SUMMARY OF THE OPENING STATEMENT
OF THE EUROPEAN UNION AT THE PANEL MEETING
Mr. Chairman, distinguished Members of the Panel,
1. We come to this hearing as the Party t hat has filed the most recent written submission,
which, like our first written submission, is a substantial document. You may be relieved to hear
that we therefore have a relatively short oral statement for you today.
2. So what is it that we should say t o you today? We are not in a position to react, in this oral
statement, to the submission just delivered by the United States, although we will of course do so
in due course, in response to your written questions. You have already seen our written
submissions, in which we explain how and why we have complied with the recommendations and
rulings of the DSB, and we do not want to repeat ourselves. This is an oral statement, not a
written submission, and we do not wish to burden you with inappropriate and excessive detail.
3. How, then, should we use the time available to us in this hearing most profitably? It seems
evident to us that we should rather focus on the big picture. In particular, we would like to focus
on some broad cross -cutting shortcomings and a ttempted (but failed) short -cuts in the overall
structure of the US case.
4. That does not mean that what we have to say today is mere rhetoric, detached from the
specific legal determinations you are charged with making. Rather, we take this approach in order
to highlight a pattern in the US arguments in these proceedings. Specifically, when the matters in
dispute get refined down to the detailed point of adjudication, the United States tends to have
recourse, expressly or by implication, to one of the bi g picture issues we address today,
attempting to use it, subjectively, to mask a shortcoming in its evidence, or to colour the
adjudication in its favour. You, in contrast, are charged with making an objective assessment of
the matter at hand. These big pi cture issues are, therefore, highly pertinent to the assessment
that you are called upon to make in this case, in the sense that they need to be brought out of the
shadows, challenged and dispelled. That is what we set out to do in this oral statement.
5. Were we to encapsulate these issues in one word, that word would probably be
"assumption". It is sometimes said that the devil is in the detail. Well, as I have already indicated,
we think we have covered the detail in our written submissions, and we would say that what is in
that detail is the truth, or at least as close as one can reasonably get to it. In the case of the US
submissions, we would rather say that the devil is in the assumptions – the subjective
assumptions – that litter the entire US case. People say that the bigger the assumption the more
likely it is to be believed. Thankfully, such assertions carry no weight in the WTO 's unflinching
rules-based system, which is based on an objective assessment of the matter, and particularly of
the evidence.
6. What sort of subjective assumptions are we speaking of? Here are a few of them, taken
from the US' submissions and public statements:
 The WTO found that the amount of the subsidies at issue in this dispute is USD 18 billion.1
 The complainant does no t have the burden of proof in compliance proceedings involving
subsidies. Accordingly, the United States need not demonstrate that subsidies exist after the
end of the implementation period, in order to show that the subsidies have not been
withdrawn. Nor need the United States demonstrate present adverse effects presently
caused, in order to show that the adverse effects have not been removed.

1 "In April 2012, the United States initiated compliance panel proceedings due to the EU's apparent
failure to comply with the WTO's 2011 findings that $18 billion in subsidies conferred on Airbus by the EU and
member countries were WTO inconsistent". The President's 2013 Trade Policy Agenda, available at:
http://www.ustr.gov/sites/default/files/Chapter%20I%20-
%20The%20President's%20Trade%20Policy%20Agenda.pdf.

- C-15 -

 Although a responding Member enjoys the choice between withdrawing a subsidy or
removing the adverse effects, WTO implementation obligations are more stringent for
subsidies than for other types of measure, such that the respondent remains responsible for
allegedly lingering adverse effects from withdrawn subsidies.
 The market never engages in project finance, and risk-sharing cannot be priced at market.
 In competitive markets, every subsidy causes adverse effects.
 In particular, financing extended by the EU member States always causes an LCA
programme to be launched, even where the programme was economically viable without the
alleged subsidy, and even where the recipient could have funded the launch without the
alleged subsidy, as long as newspaper articles and the generic Dorman model say so.
 A complainant can assume that subsidies benefiting one product cause econom ic harm to
another product, without evidence and analysis demonstrating that the two products fall into
the same product market.
 The adverse effects from an actionable subsidy do not dissipate, but instead increase, with
time, for as long as a subsidised product, and any subsequent products, are in the market.
 Without the subsidies, there would be no EU LCA industry, or at least none of Airbus' current
or future products would exist.
 The United States never grants subsidies, has never granted subsidies to Boeing, and in any
event this is irrelevant.
7. These subjective and erroneous assumptions permeate the entire US case, expressly or by
implication. When the overall effect is considered, the US approach is simply jaw -dropping, remote
as it is from the requirements set out within the four corners of the SCM Agreement.
8. Well, we have covered these issues in our written submissions, and as I have said, we do
not want to repeat ourselves. But let us take a couple of points by way of example, to illustrate
what we mean.
9. Consider the proposition that where two firms compete, each and every subsidy to one must
be assumed to cause adverse effects to the other. That is exactly what the United States does in
this dispute: it asks you to accept the assumption th at each and every alleged subsidy to Airbus
causes adverse effects to Boeing, because the two companies compete for LCA sales.
10. Now, the WTO has indeed found that some EU member States have provided repayable
loans to finance portions of Airbus' development costs. But there is no such thing as a free lunch –
and this is a pertinent observation here in two senses.
11. First, these loans are not grants given without any repayment obligation in return (like the
funds provided by the United States to Boeing ) – they are repayable. Why then does the
United States insist on asserting that the WTO has found that the am ount of the subsidies is
USD 18 billion? Every person in this room knows this assertion to be false. The WTO has "found"
no such thing. The United States appears to refer to what it alleges to be the amount of the
principal involved. But the objective facts and evidence reveal more – that the agreements require
repayment (and in fact many of the loans have been repaid, with interest). The US assumption
about USD 18 billion worth of subsidies is thus untenable, and directly contradicted by the facts
and the evidence.
12. Second, even if the United States would have established that the interest rate on any of the
loans was below a market benchmark, t here has still been a quid pro quo. And that quid pro quo
is location – that is, the additional costs to Airbus in being constrained to develop and produce
the aircraft in Europe as opposed to elsewhere.
13. As in the United States, including with respect to Boeing, a cornerstone of European
industrial policy is creating and maintaining high quality jobs. We are not ashamed of that, any

- C-16 -

more than is the United States – and a great many statements to that effect have been made by
both the US authorities and by Boeing.
14. The covered agreements do not suggest that this type of measure, which is conceptually
similar to financing the additional costs of adapting to more stringent local environmental
standards, is particularly problematic. Quite the contrary. T he SCM Agreement expressly
recognises that government assistance for various purposes is widely provided by Members, and
that the mere fact that such assistance may not be non -actionable does not restrict the ability of
Members to provide it. 2 Environmental subsidies were temporarily non -actionable,3 and even
today, like all other subsidies, and by way of an additional requirement compared to other types of
measure, a complaining Member must demonstrate, with evidence, that a subsidy causes serious
prejudice.
15. Accordingly, if a Member finances the cost of fitting a scrubber to a firm's chimney to comply
with local environmental standards in its jurisdiction, a panel bound by the requirement to
undertake an objective assessment of the matter cannot assume that this causes serious prejudice
to a firm in another jurisdiction that is not subject to the same environmental standard.
16. That observation is just as pertinent to the case before you today, and triggers a critical
question. Even if the EU member S tates' financing offsets Airbus' additional costs in being
constrained to develop and produce the aircraft in Europe as opposed to elsewhere, how can it be
used to cause serious prejudice to US interests, that is, to Boeing?
17. In a rules -based dispute se ttlement system, the answer to this question cannot be that,
because Airbus and Boeing compete in various product and geographic markets, every subsidy to
one must be assumed to have "created" the recipient or one of its products, and for this reason, to
have caused serious prejudice to the other. Rather, the existence of a subsidy to one causing
adverse effects to the other must be proven, with evidence, on the basis of a reasonable and
appropriately calibrated causal mechanism.
18. Rather than undertaking the required task of demonstrating that net funds remain, and are
used to price down LCA and trigger one of the enumerated forms of serious prejudice listed in
Article 6.3 of the SCM Agreement, the United States has resorted to various attempted short -cuts,
which collectively amount to little more than a leap of faith. This is particularly true of the US '
cascading "creation" causation argument, which culminates with the alleged effect of European
government financing on the launch of the A350XWB. Specific ally, the United States argues that
EU member State financing caused Airbus to launch an aircraft that it would not otherwise have
launched, and that that launch taught Airbus things that caused subsequent aircraft to be
launched, and that each of these la unches caused Airbus to win sales and take market share from
Boeing, and that this harm persists for as long as any Airbus aircraft, including those that may
subsequently be developed and launched, are sold.
19. In short, the alleged subsidy itself is not shown, with evidence, to cause any of the
enumerated forms of serious prejudice listed in Article 6.3. Instead, the starting point – that
Airbus received EU member State financing – and the ending point – that Boeing has made some
sales but not others and has a particular market share – are simply fused together. The middle, or
how those two points are bridged, is murky, and joined through attempted short -cuts, artifice and
mere assumption.
20. We are not saying that an attenuated causal chain involving m ultiple links from alleged
subsidy to alleged adverse effects is impossible to construct. But the longer and more attenuated
the alleged chain, the more diligent and rigorous a complainant must be if it is to succeed, and the
more demanding the adjudicator should be. In this case, the United States is asserting a
particularly attenuated causal chain, in an attempt to jump the gap from alleged subsidy to alleged
adverse effects, particularly by employing a series of attempted short -cuts, which are simply not
supported by the evidence. It is a leap of faith that fails.
21. Thus, we are calling the US bluff. We are raising our hand and saying that the emperor has
no clothes. A rules -based system requires proof of claims made. An intuition that an alleged

2 SCM Agreement, footnote 23.
3 SCM Agreement, Article 8.2(c).

- C-17 -

subsidy to one firm harms a competing firm is not enough . A rules -based system requires
objective evidence establishing the alleged causal links the United States asserts, rather than
attempted short-cuts and assumption. What does this mean in practice in this case?
22. First, it means holding the United States to its procedural obligations. We know that the
United States is trying to back -load these proceedings and deprive the European Union of its due
process rights by ambushing us, and constraining our abilit y to respond. This tactic began by filing
a first written submission that lacked any real substance and that challenged as actionable
subsidies measures it had not even seen, on the false assumption that it lacked the procedural
means to seek evidence in a dvance, through Annex V, or questions posed pursuant to Article 13.1
of the DSU. The tactic has had a knock -on effect, such that, only today, we are hearing for the
first time evidence and argument that should, consistent with the United States ' burden as
complainant, have been provided to us and to you nearly 12 months ago. We say that untimely
material must simply be rejected.
23. Second, it means holding the United States to the law, as clarified by prior disputes. When
the United States sets out, as it has done in other instances, such as with respect to Annex V, to
challenge the Appellate Body – the agreed final adjudicator in our treaty system – its submissions
need to be dealt with accordingly. We note in this regard the United States ' refusal to accept the
Appellate Body's express finding, in this dispute, that a subsidy has a finite life, set on an ex ante
basis at the time of grant. Similarly, the United States challenges the Appellate Body 's finding that
the repayment of the financial contribution (for example in the form of principal and interest)
brings a subsidy to an end. Moreover, it challenges the Appellate Body 's finding that the effects of
subsidies dissipate over time, asserting instead that the effects of any subsidies to Airbus exist for
as long as Airbus sells and delivers any and all of its products.
24. Third, and perhaps above all, it means holding the United States to its burden of proof and
persuasion. The United States had a job to do in these proceedings, as a function of its role as
complainant in a dispute governed by the DSU and Article 7.8 of the SCM Agreement. That was to
demonstrate that subsidies exist after the end of the implementation period – such that they have
not been withdrawn – and that those subsidies presently cause present adverse effects – such that
those adverse effects have not been removed. It has shirked the task, in favour of the types of
attempted short-cuts and subjective assumptions we have already mentioned.
25. Shirking that task is a choice, and the Un ited States is free to have made it. You, however,
are not free to accept it. You are charged with objectively assessing the evidence, to determine
whether it supports the claims advanced by the United States. That the US gamble involves high
stakes is no reason to substitute subjective assumptions for objective and detailed assessment,
based on evidence. WTO dispute settlement is not a game of poker. It is an international legal
adjudication. As I have already said, we are calling the US bluff, and we resp ectfully ask you to do
the same. If this means rejecting the US case, then that is entirely right and proper, as a response
to a strategic choice by the United States to employ attempted short -cuts and subjective
assumptions instead of evidence.
26. In closing our oral statement, it is worth recalling that we evidently did not choose to bring
this dispute, or the companion dispute involving US subsidies to Boeing, to the WTO. We recognise
that it places a huge burden on the WTO dispute settlement system. M oreover, these disputes,
triggered by a US objection to an alleged location subsidy to create jobs in the European Union, do
nothing to advance trade – something evident from the mutual requests for countermeasures
involving tens of billions of US dollars annually. It appears that, for Boeing, this litigation may be a
relatively cheap option to pursue commercial interests by other means, with potentially substantial
results. It suits Boeing to paint Airbus as "the bad guy " for domestic reasons, including US
government procurement, asserting alleged WTO findings that Airbus received USD 18 billion of
subsidies, whilst Boeing has, as the story goes, received none.
27. Everyone understands perfectly well that resolving the underlying issues may require an
agreement of some kind, and one that may well be of interest to or involve other Members. We
understand that. This is the multilateral way forward, capable of adequately reflecting the trade
interests of all WTO Members. The European Union is ready to engage i n it, on balanced terms.
The imbalanced and unsupported assumptions that underpin the US case – to the effect that
Airbus should not even exist – and which appear to be driven by an agenda that is not conducive

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to trade, are fundamentally at odds with such a rational outcome, and we ask you to reject them,
in favour of an objective assessment of the evidence.
Mr. Chairman, distinguished Members of the Panel, we thank you for your attention, and stand
ready to answer any questions you may have.

- C-19 -

ANNEX C-4
EXECUTIVE SUMMARY OF THE CLOSING STATEMENT
OF THE EUROPEAN UNION AT THE PANEL MEETING
Mr Chairman, distinguished Members of the Panel, in our Closing Statement, we would like to
address selected points that were raised over the past few days.
I. OPTION TO WITHDRAW THE SUBSIDY UNDER ARTICLE 7.8 OF THE ASCM
1. The AB has found that, in original proceedings involving claims under Articles 5 and 6 of the
ASCM, it is possible for an adjudicator to find that expired subsidies have contributed to adverse
effects. On Tuesday, the Panel asked whether, in that circumstance, allowing a respondent in
compliance proceedings to refer to the expiry of the subsidy as a means of achieving withdrawal
and compliance with Article 7.8 of the ASCM would make the recommendation in t he original
proceedings declaratory in nature.
2. To begin, the situation described by the Panel should not arise. Specifically, whatever the
merits of a finding, no recommendation to withdraw a subsidy or to remove its adverse effects is
necessary in tha t circumstance. Where a recommendation to withdraw the subsidy or to remove
the adverse effects from a group of subsidies, some of which had expired, is nonetheless issued,
that recommendation "do{es} not concern" the expired subsidies. After all, Article 7.8 applies only
to the extent the respondent is "granting or maintaining" the subsidy. If the subsidy is no longer
"maintained", because it has been withdrawn, any recommendation is unnecessary, and if made,
does not apply to the withdrawn subsidy. The AB has noted that an interpreter must "give
meaning and effect to the term 'maintain', which is distinct from the term 'grant', and has also
been included in" Article 7.8.
3. Moreover, even if a recommendation to withdraw the subsidy or to remove its adverse
effects could be said to apply to expired subsidies, quod non, withdrawal can be achieved through
actions or events pre -dating the DSB 's adoption of that recommendation. The AB has, again,
explicitly confirmed that "compliance with the recommendations and rulings of the DSB can be
achieved before the recommendations and rulings of the DSB are adopted".
4. In these compliance proceedings, your inquiry is governed by Article 7.8, which gave the EU
a choice between withdrawing the subsidy or removing the adv erse effects. The AB found that the
assessment of whether withdrawal has occurred and, thus, compliance achieved, is "best left to "
you, as the compliance Panel operating under Article 7.8. Contradicting the AB, the US asserts
that, where a subsidy has exp ired before a recommendation to withdraw the subsidy or remove
the adverse effects has been made, the choice expressly provided for in Article 7.8 no longer
applies, because withdrawing the subsidy is no longer possible.
5. However, the only reason why wi thdrawing the subsidy is not possible is because it has
already been withdrawn , in furtherance of "the first objective of the dispute settlement
mechanism". While the Parties agree that withdrawal of a prohibited subsidy is a complete
remedy, the US positi on is premised on the argument that achieving compliance through the
withdrawal of merely actionable subsidies is not painful enough on the respondent. To the US,
Article 7.8 always requires "affirmative action " by a respondent, such that when the subsidy is
expired (e.g., through amortisation), affirmative action to achieve withdrawal is no longer possible,
and the only affirmative action remaining is to remove the adverse effects.
6. In considering the US position, we have asked you to bear in mind that Article 7.8 triggers
the responsibility of the respondent to ensure that compliance is achieved, through withdrawal of
the subsidy or removal of the adverse effects. If compliance is not achieved, despite affirmative
action by the respondent, its responsib ility for non -compliance persists. Equally, if compliance is
achieved without affirmative action, the respondent's responsibility is discharged. The requirement
is that compliance with Article 7.8 is achieved, regardless whether it is achieved through the
actions of the responsible State, or instead through other events that accomplish withdrawal of the
subsidy or removal of the adverse effects.

- C-20 -

7. As a closing point on the option of withdrawal, the US now argues that the phrase "withdraw
the subsidy " means something different in Article 7.8, than it does in Article 4.7 of the ASCM.
However, we recall that a "subsidy" is defined in Article 1 "{f}or the purpose of this Agreement ",
including both Articles 4 and 7. Withdrawing the subsidy involves "removing" or "taking away" one
of the component elements of "subsidy" defined in Article 1, whether pursuant to Article 4.7, or
instead Article 7.8. The US position is inconsistent with the text of the ASCM, as well as with the
position it has taken elsewhere. It is also premised on the US assertion that compliance obligations
under Part III of the ASCM are more stringent than compliance obligations under other
agreements that form part of the WTO single undertaking, such as, for example, fiscal or
regulatory measures – a proposition that is obviously incorrect.
II. AMORTIZATION
8. For the US, the expiration of the life of a subsidy through amortisation is a concept relevant
solely to the assessment of whether adverse effects have been removed, but not to the question of
whether a subsidy has been withdrawn. Undertaking a proper adverse effects analysis does require
consideration of the degree to which a subsidy is amortised. However, amortisation is equally
relevant to an assessment of whether a subsidy has been remove d, taken away, expired, ceased
to exist, or in other words, withdrawn. As Brazil suggested in its statement, if it 's a dead subsidy,
it's a dead subsidy.
9. On a related issue, on Tuesday, the US argued that amortisation over the actual life of an
LCA pro gramme is required, and is ex ante rather than ex post , on the assumption that the
"payments under LA/MSF contracts in most cases continue over the actual life of the aircraft ". This
assumption is simply wrong as a matter of fact. The agreements anticipate repayment of principal
and interest over an expected delivery profile that does not correspond to the life of the aircraft
programme, either as anticipated at the time the agreements are concluded, or as the life of the
programme unfolds with time (if dif ferent). It is simply incorrect to say that the agreements
foresee repayment over the entire life of the programme.
10. In any event, the AB unambiguously stated that the finite life of a subsidy, as distinct from
the period over which that subsidy causes effects, must be assessed on an ex ante basis. The
concepts of subsidy and effects must not be "conflate{d}". Yet this is precisely what the US does
when it insists on an amortization period defined by the actual life of a product allegedly created
by that subsidy, destroying the choice in Article 7.8 in the process.
III. JURISDICTION OVER A350XWB MSF AGREEMENTS
11. The EU has explained that the A350XWB MSF agreements are outside the scope of the
compliance Panel's jurisdiction, as they are not "measures taken to comply", within the meaning of
Article 21.5 of the DSU. Indeed, the US attempt to bring the A350XWB agreements within the
scope of these compliance proceedings is tantamount to rearguing the existence of "an unwritten
LA/MSF Programme" – a claim that the original panel had previously rejected. Were the Panel to
find that the A350XWB agreements are within the scope of these proceedings, it would be going
further than the AB has ever gone in affirming jurisdiction under Article 21.5. Doing so would
disrupt the delicate balance between due process and prompt settlement that the AB has faithfully
maintained in its interpretation and analyses under Article 21.5.
12. In the past few days, the US has made several important admissions that confirm the EU 's
position on scope. First, the US has conceded for the first time that the A350XWB agreements are
not part of any overarching measure. Second, the US has acknowledged the important overlap
between, on the one hand, the factors relied upon by the original pane l in finding that there was
no LA/MSF programme, and, on the other hand, the factors of the traditional "close nexus "
analysis. When considered together, these US admissions are fatal to its attempt to force the
A350XWB agreements into the scope of these p roceedings. Consequently, there is no need to
consider further any of the US claims related to the A350XWB agreements.
IV. ALLEGED BENEFIT FROM A350XWB MSF
13. The US makes two arguments concerning an alleged "benefit" from A350XWB MSF that are
difficult to reconcile. First, the US argues that, as asserted in the Dorman/Terris and Terris reports,

- C-21 -

the market will not offer "risk-sharing" or "risk shifting ", such that MSF confers a "benefit" on
Airbus per se. Second, the US "advoca{tes}", with the assistance of Dr. Jordan, a "constructed
benchmark", arguing that "rates charged on LA/MSF for the A350 XWB are below " rates the
market would charge for the risk -sharing or risk -shifting characteristics of MSF. The second
argument unquestionably accepts, as did the o riginal panel, that it is possible to quantify the
"rate", or price, that the market would charge for the risk-sharing attributes of MSF.
14. In essence, the US appears to be advancing two arguments in the alternative, or the second
conditioned on the out come of the first. First, the US argues that pricing the alleged benefit in
A350XWB financing is impossible. Second, the US submits that, in case you do not accept the first
argument, the alleged benefit must be priced against a market benchmark of "X". We lawyers do
love our arguments, and hedging our bets. But there are some circumstances in which two
arguments cannot co-exist, and this is one of them. This is because the second US argument
demonstrates that pricing is possible relative to market. The very making of this second argument
thus demonstrates, on its own terms, that the first argument is necessarily false. The only dispute
between the Parties thus relates to the pricing of the market benchmark. The proposition that the
market would not price risk-sharing on any terms, by definition abandoned by Ellis and Jordan, has
no further role to play in these proceedings.
V. PRODUCT MARKET DELINEATION
15. The AB emphasised that a proper product market delineation is "a prerequisite for
assessing" whether adverse effects exist. If a subsidised product and a like product do not
compete in the same market, the subsidy cannot, without more, be a cause of lost sales or
displacement suffered by the like product.
16. In contrast, the US identifies sales that a Bo eing LCA lost to an allegedly subsidised Airbus
LCA, and assumes, from that fact alone, that the subsidy caused the loss. This turns the AB 's
directive on its head, by assuming causation without first establishing the "prerequisite" that the
subsidised product is capable of causing the lost sale. The allegedly subsidised Airbus LCA is only
capable of causing the lost sale if the Airbus and Boeing LCA compete sufficiently closely to
exercise significant competitive constraints on one another, such that they are in the same
market. It may be that the Boeing LCA lost because it did not meet the requirements of the
purchaser, and was not considered sufficiently substitutable for the Airbus LCA – in other words,
the Boeing LCA was not in the same product market a s the Airbus LCA. Without a proper product
market assessment that looks at cross -elasticity of demand, the US assertion of causation is
nothing more than an assumption divorced from the reality of the absence of any competition
between specific LCA models.
VI. CAUSATION FINDING
17. On Tuesday, the Parties discussed their respective reading of the basis for the original
panel's and the AB 's causation finding. As explained, neither paragraphs 1261, 1267 nor 1299 of
the AB Report, nor the underlying findings by the original panel referenced by the US, support its
view that the causation findings in the original proceedings were based on the effect of subsides
creating Airbus LCA. Instead, the findings were based on the effects of subsidies accelerating the
launch of such LCA. An objective and comprehensive reading of these findings compels the
conclusion that they offer no support for the new US creation theory.
18. In any event, whatever the basis for the findings of the original panel and the AB, the
question in these compliance proceedings is different, and is dictated by the terms of Article 7.8.
The question before this Panel is whether, in light of the withdrawal of the subsidies, there remains
any basis on which to find present adverse effects presently c aused by subsidies allegedly existing
after the end of the implementation period.
19. For example, assume that a Member is found to have granted 10 subsidies that cause a
particular adverse effect in the original reference period, such as a lost sale. If nine of those
subsidies are withdrawn by the end of the implementation period, Article 7.8 requires a compliance
panel to inquire whether the one remaining subsidy that is maintained presently causes, by itself,
a new adverse effect in the new reference pe riod, after the end of the implementation period.
Alleged present effects of subsidies that are withdrawn, and for which compliance has been

- C-22 -

achieved, cannot form any part of a finding of non -compliance based on present adverse effects
allegedly caused, or contributed to, by such withdrawn subsidies.
VII. ECONOMIC VIABILITY OF THE A350XWB, AND EADS ' CAPACITY TO FUND THE
PROGRAMME
20. As in its previous submissions, the US argues that MSF for the A350XWB is a genuine and
substantial cause of adverse effects to US interests because it "was a necessary precondition for
the ... launch and subsequent market presence " of the aircraft. In other words, the US argues
that, absent MSF for the A350XWB, the programme would not have been launched, because it was
not economically viable, and could not have been funded.
21. In making this assertion, the US relies on, and distorts, a series of press articles and other
statements offering the subjective views of reporters and parties to the MSF agreements. In
contrast, the EU has offered quantitative evidence, built on data contemporaneous with the launch
and funding decisions. Although not the EU 's burden, that evidence objectively establishes the
economic viability of the programme, and EADS ' ability to fund its launch and development, while
simultaneously pursuing all of its other objectives. Only by ignoring this evidence can the US posit,
for example, the following:
That the A350XWB programme was viable and fundable only because of the potential use of
certain financing – which the US, without any support whatsoever apart from
"assum{ption}", describes as "subsidized". In fact, the objective evidence specifically
demonstrates that the programme was viable and fundable without such financing (or, for
that matter, MSF).
That business case sensitivities implicating less favourable outcomes, result in non -viability
of the programme. In fact, the objective evidence test s for these very sensitivities and
scenarios, establishing that the programme was economically viable, even absent both the
referenced financing and MSF.
That projections for A350XWB deliveries are unduly "rosy" and mask non -viability simply
because they exceed historic levels of wide -body programme deliveries. In fact, at the time
of launch to the present, Airbus ' forecast for wide -body LCA demand has been and is
consistent with Boeing 's market forecast, as well as that of others. And Airbus ' delivery
forecast for the A350XWB are conservative.
That a "crisis" at the company, and the global financial crisis more generally, prevented it
from launching the A350XWB without certain financing or MSF, at least without "divert{ing}
funds from other uses ". In fact, the objective evidence establishes th at, absent particular
financing or MSF, and despite the financial crisis, the company 's financial position was
sufficiently strong to comfortably enable it to fund the programme, while simultaneously
pursuing all of its other objectives.
That the company could only have funded the A350XWB programme by "getting risk-sharing
suppliers to nearly double their contributions ". In fact, the objective evidence establishes
that the company could have funded the programme without any increase in financing from
risk-sharing suppliers.
That the company "knew" it was "guaranteed" financing in the form of MSF, and on
subsidised terms, at the time it launched the A350XWB. In fact, the objective evidence
establishes that the company launched the programme in 2006, before any of the terms for
any financing from the EU member States were negotiated, much less agreed. That evidence
also establishes that, following launch, the company has achieved an advanced stage of
development for the programme while not drawing the full amount available.
22. The US has addressed none of this objective evidence. It is not the EU that confuses
"willingness" or "wanting" to launch the A350XWB with the "ability" or the "means" to do so.
Instead, it is the US that is ignoring objective evidence establishing, on a quantitative basis and in
light of contemporaneous data, that the company indeed had both the ability and the means to
comfortably launch and develop an economically viable A350XWB programme, absent MSF. On

- C-23 -

this "decisive point ", it is the US, and not the EU, that ignores "indisputable" evidence, instead
replacing it with mere assertion and assumption. And the US does this with respect to measures
that are not even within the scope of these compliance proceedings.
VIII. RELEVANCE OF DOWN-SIDE SCENARIOS FOR ASSESSING PROJECT VIABILITY
23. Finally, in its Opening Statement, the US takes the untenable position that any risk that
returns from a project could fall below the hurdle rate will lead a firm to decide not to invest at all
in the project, for fear of t he risk materialising. On the US view, every downside risk scenario
necessarily becomes the project's base case.
24. This is a ludicrous position. It is inconsistent with "the real world" in which people decide to
invest despite uncertainty about what the future holds. The US position can be compared to a
family's considerations of its holiday plans, where the expectations of plenty of sunshine and days
at the beach will be evaluated on the basis of a long -term weather forecast. The fact that there
could b e one day with rain out of 14 will not be a serious deterrent. Only a relatively high
probability of persistent rain and little sunshine will lead the family to seek out alternative
locations. Only a higher probability of widespread and persistent catastro phic conditions will lead
the family to cancel their holiday plans altogether.
25. Similarly, Airbus assessed the relative probabilities of a base case, and that of unfavourable
events, in evaluating the economic viability of the A350XWB programme over it s expected
duration. Airbus concluded that the project is viable because the likelihood of unfavourable events
that would undermine the base case was relatively low. That assessment also took account of the
likelihood that events may turn out to be more fa vourable than the conservative assessments
made in the base case – something the US ignores.
26. In performing an independent comprehensive sensitivity and scenario analysis of the
A350XWB, CompetitionRx concluded that the programme is viable because the base case is robust
and the probability of unfavourable events is not sufficiently high to undermine the project 's
expected return. As both Airbus and CompetitionRx determined, the extreme circumstances
captured in a "worst case" scenario, which combines m ultiple downside factors, would result in a
return below the cost of capital. Since the probability of this combination of events is very low,
however, the worst case scenario did not alter the conclusion that the A350XWB programme is
economically viable. Both holiday takers and industrial investors realise that even the most
carefully evaluated plan may result in days of torrential rain and worse -than-anticipated financial
performance. If absolute certainty, as the US would have it, of sunny days and profi table returns
were required before we vacationed or invested, we would all stay at home protecting the cash
stuffed in our mattresses.

- D-1 -

ANNEX D
ARGUMENTS OF THE THIRD PARTIES
Contents Page
Annex D-1 Executive Summary of the statement of Australia at the Panel meeting D-2
Annex D-2 Executive Summary of the written submission of Brazil D-4
Annex D-3 Executive Summary of the statement of Brazil at the Panel meeting D-7
Annex D-4 Executive Summary of the written submission of Canada D-9
Annex D-5 Executive Summary of the statement of Canada at the Panel meeting D-13
Annex D-6 Executive Summary of the written submission of China D-16
Annex D-7 Executive Summary of the statement of China at the Panel meeting D-20
Annex D-8 Executive Summary of the written submission of Japan D-22
Annex D-9 Executive Summary of the statement of Japan at the Panel meeting D-26
Annex D-10 Executive Summary of the statement of the Republic of Korea at the Panel
meeting
D-31

- D-2 -

ANNEX D-1
EXECUTIVE SUMMARY OF THE STATEMENT OF AUSTRALIA
AT THE PANEL MEETING
Mr. Chairman, Members of the Panel
1. Thank you for the opportunity to present Australia's views on this dispute.

2. This proceeding raises a number of important issues concerning the scope of proceedin gs
under Article 21.5 of the Dispute Settlement Understanding and the appropriate steps that must
be taken by a Member to comply with Article 7.8 of the Agreement on Subsidies and
Countervailing Measures (SCM Agreement). Australia will make some brief rema rks in relation to
these issues.

Scope of these proceedings

3. Australia agrees with the United States (US) that the Launch Aid/ Member State Finance
(LA/MSF) support for the A350XWB is within this Panel's terms of reference. Australia supports the
three legal bases provided by the US for the consideration by this Panel of the A350XWB LA/MSF
measure.1

4. Australia does not accept, as posited by the EU, that because the A350XWB financing
agreements do not form part of the EU's compliance report as a "measure taken to comply"2 or the
Appellate Body was unable to discern the presence of an "overarching measure " in the original
proceedings,3 that these measures do not fall within the jurisdiction of this Panel.

5. The Appellate Body has made it clear that the limits on the scope of Article 21.5 proceedings
should not allow the effective circumvention by Members of those provisions by allowing them to
comply through one measure, while at the same time negating compliance through another. 4 In
Australia's vie w, an overly narrow approach to Article 21.5 proceedings could undermine the
effectiveness of the dispute settlement process.

6. Australia would encourage this Panel to consider the LA/MSF measure for the A350XWB as
within its terms of reference.

Compliance

7. Under paragraph 7.8 of the Agreement on Subsidies and Countervailing Measures , the EU
had six months, subsequent to the 1 June 2011 adoption of the Appellate Body and Panel Reports,
to take "appropriate steps to remove the adverse effects" of the actionable subsidies identified by
the Panel and the Appellate Body, or to withdraw the subsidies.

8. In complying with this obligation, the EU was, in Australia 's view, required to take
affirmative action to withdraw all current subsidies to Airbus that had been found to be non -
compliant, or to take affirmative action to remove the adverse effects of those subsidies.5

9. Australia does not take a position on whether the specific actions taken by the EU are
sufficient for the purposes of Article 7.8 of the SCM Agreement. In Australia's view, the role of this
Panel is to determine the extent to which the EU has addressed these obligations. In examining
compliance, Australia believes that where a complaining Member has shown a lack of appropriate
action by the implementing Member, it will have established a prima facie case of non-compliance.
The burden of demonstrating the intervening events which break the nexus between the non -

1 US First Written Submission, Sections IV.D-E and US Second Written Submission, para. 113.
2 EU Second Written Submission, Section III.A, para. 50.
3 EU Comments on US Request for Preliminary Decision, Section VIII, para. 84.
4 US – Softwood Lumber (IV) (Article 21.5 – Canada) (WT/DS257/AB/RW), paras. 71-72.
5 US – Upland Cotton (Article 21.5) (WT/DS267/AB/RW), para. 236.

- D-3 -

compliant measures, the adverse effects, and bringing the measures into compli ance should then
rest with the implementing member.

10. Mr. Chairman and Members of the Panel, this concludes Australia 's remarks. Thank you for
the opportunity to provide these comments.

- D-4 -

ANNEX D-2
EXECUTIVE SUMMARY OF THE WRITTEN
SUBMISSION OF BRAZIL
I. INTRODUCTION

1. This Panel's interpretation of the relevant provisions of the Agreement on Subsidies and
Countervailing Measures ("SCM Agreement ") is critical to ensuring the effectiveness of
multilateral disciplines on the use of subsidies, particula rly in the civil aircraft sector.

2. Brazil's comments focus on the following issues raised by the United States in its first
written submission: (1) the proper interpretation and application of the requirement imposed
by Article 7.8 of the SCM Agreemen t to "take appropriate steps to remove to adverse effects"
or to "withdraw the subsidy"; (2) the appropriate scope of implementation proceedings under
Article 21.5 of the Understanding on Rules and Procedures Governing the Settlement of Disputes
(the "DSU" ); and (3) the proper approach to determining the existence of de facto export
contingency.

II. LEGAL ARGUMENT

A. THE OBLIGATION TO "TAKE APPROPRIATE STEPS TO REMOVE THE ADVERSE EFFECTS" OR TO "WITHDRAW
THE SUBSIDY" REQUIRES A POSITIVE ACTION EITHER TO REVERSE THE COMPETITIVE ADVANTAGE THAT WAS
GAINED AS A RESULT OF THE SUBSIDY OR TO PUT AN END TO THE SUBSIDY

3. The European Union was required to "take appropriate steps to remove the adverse effects"
or to "withdraw" the actionable subsidies identified by the Panel and the Appellate Body within six
months following the 1 June 2011 date of adoption of the Panel and Appellate Body Reports. Brazil
does not take a position on whether the specific measures taken by the EU were sufficient for
purposes of Article 7.8 of the SCM Agreement and Article 19 of the DSU. In this submission, Brazil
instead focuses on the proper interpretation of the important obligation under Article 7.8 of the
SCM Agreement to "take appropriate steps" to "remove the adverse effects" or to "withdraw the
subsidy."

4. Brazil finds the jurisprudence of US – Upland Cotton (Article 21.5 – Brazil) to be enlightening
as to the proper interpretation of the terms "shall take appropriate steps" in relation to the actions
to be taken by the implem enting Member. The Member is expected to take an affirmative,
appropriate action and cannot be considered as having complied with the obligation of Article 7.8
of the SCM Agreement if it does not actively intervene to remove the adverse effects.1

5. The focus of Article 7.8 of the SCM Agreement is to remedy the specific problem found to
exist that nullified or impaired the benefits under the SCM Agreement accruing to the complaining
Member. The focus in Part III of the SCM Agreement on "actionable subsidie s" is on the adverse
effects caused by the use of a subsidy, not on the existence of the subsidy itself.

6. The fact that a subsidy was granted in the past, that the "benefit" has expired, and that the
subsidy no longer exists does not prevent a finding o f adverse effects caused by past subsidies.
This is particularly relevant for launch aid subsidies, which may continue to cause adverse effects
long after they have been granted and repaid due to the presence of aircraft models that otherwise
would not have been competing in the market.

7. The question before this Panel is thus which "steps" the EU has taken and whether these
steps are "appropriate to remove the adverse effects." The steps will only be "appropriate" if they
impact the specific adverse eff ects found to exist and are likely to lead to the removal of the
specific adverse competitive advantage that resulted from the use of the subsidy.

8. In a situation where one subsidy replaces another, the Panel will need to examine the
consistency of the new measure taken to comply with the obligations imposed by the SCM

1 Appellate Body Report, US – Upland Cotton (Article 21.5 – Brazil), para. 236.

- D-5 -

Agreement. This will require the Panel to examine whether the new measure is a subsidy and
whether the adverse effects continue to exist in the context of the new subsidy measure. This wi ll
likely be the case if the implementing Member has not taken any other steps to remove the
adverse effects found to exist and has simply replaced one subsidy measure with another.

B. LA/MSF SUPPORT FOR THE A350XWB IS WITHIN THIS PANEL'S TERMS OF REFERENCE AS A "MEASURE
TAKEN TO COMPLY" BECAUSE IT HAS A SUFFICIENTLY CLOSE NEXUS WITH THE ORIGINAL MEASURES
ADDRESSED IN THE PANEL AND APPELLATE BODY REPORTS AND WITH THE MEASURES TAKEN TO COMPLY

9. Brazil considers that the it is the task of the compliance Panel to ultimately determine the
appropriate scope of its own jurisdiction in a given dispute, and that it is thus not for the
implementing Member to define what it considers to be the measures taken to comply. 2 Brazil
suggests the Panel should not adop t an overly formalistic approach in setting its terms of
reference, with a view toward protecting the effectiveness of the WTO dispute settlement process
and ensuring prompt compliance and effective resolution of the dispute. These principles argue in
favor of including in the scope of this Article 21.5 proceeding new LA/MSF support for the
A350XWB which, in terms of its nature, timing, and effects, is very similar and thus closely related
to the measures that were to be brought into conformity with the Dis pute Settlement Body (DSB)
recommendations.

10. The Appellate Body has observed that a panel reviewing a claim under Article 21.5 of the
DSU may address not only the measures the responding Member identifies as taken to comply
with the recommendations and rulings of the DSB, but also any other measures with a particularly
close relationship to the declared measures taken to comply and to the recommendations and
rulings of the DSB.3 This certainly includes measures that are very closely connected because t hey
concern the same analysis of subsidies for the same category of products and may thus undermine
compliance with those recommendations and rulings.4

11. Brazil believes the Panel should put substance over form and focus on the nature and effects
of t he challenged measures in comparison with the measures taken to comply and the original
measures. In Brazil's view, a very similar type of subsidy, supporting a very similar product,
produced by the same company around the time that closely related subsidy measures were found
to be WTO -inconsistent, is a measure that can and must be included in an examination of
"measures taken to comply".

C. DEMONSTRATING EXPORT CONTINGENCY DOES NOT REQUIRE THE CONSTRUCTION OF HYPOTHETICAL SALES
RATIOS

12. In the current implementation proceeding, the US requests the Panel to re -visit the question
of de facto export contingency of the LA/MSF support for the A380 and by extension for the
A350XWB. The US seeks to apply the "geared -to-induce-future-export" test as put forwa rd by the
Appellate Body in the original proceeding in order to demonstrate that the LA/MSF support was de
facto export contingent and consequently a prohibited subsidy within the meaning of Article 3.1(a)
of the SCM Agreement.

13. Brazil considers that a review of the Appellate Body's findings in the original proceeding
demonstrates that the Appellate Body's analytical framework for considering a de facto export
contingency claim does not require a hypothetical ratio -scenario that the US is now providing to
the Panel. In Brazil's view, the ratio approach proposed by the Appellate Body is one possible piece
of additional evidence that could provide meaningful information when it involves one of the
conditions of the subsidy. However, in many situations, as demonstrated in Canada – Aircraft, no
such additional evidence is necessary or appropriate to make the essential finding of conditionality
in law or in fact.5

14. Brazil understands that the Appellate Body was simply indicating in the numerical example
relating to sales ratios what could, in certain circumstances, be one type of evidence to bridge the
gap between anticipation and conditionality in order to support, as part of the total configuration of

2 Appellate Body Report, US – Softwood Lumber IV (Article 21.5 – Canada), para. 73.
3 Appellate Body Report, US – Softwood Lumber IV (Article 21.5 – Canada), para. 77.
4 Appellate Body Report, US – Upland Cotton (Article 21.5 – Brazil), para. 205.
5 Appellate Body Report, para. 1037, referring to Appellate Body Report, Canada – Aircraft, paras. 167,
171.

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the facts, a conclusion that the granting of the sub sidy was in fact tied to anticipated export
performance. An approach that would require evidence of a sales ratio change or potential change
would unjustifiably impose a different standard in the context of de facto export contingency than
the one used in a determination of de jure export contingency and would seek to impose an
unwarranted trade effects test.

III. CONCLUSIONS

15. Brazil has focused its comments on several important issues raised in this dispute. First,
Brazil considers that the obligation to "take appropriate steps to remove the adverse effects" or to
"withdraw the subsidy" will usually require a positive action either to reverse the competitive
advantage that was gained as a result of the subsidy or to put an end to the subsidy in a manne r
that is appropriate to remove the adverse effects.

16. Second, Brazil considers that the scope of a compliance proceeding under Article 21. 5 of the
DSU must be sufficiently broad to include measures which have a close nexus with the original
measure ad dressed in the Panel and Appellate Body reports and with the measures taken to
comply, including in this dispute LA/MSF support for the A350XWB.

17. Finally, in respect of the test for export contingency, Brazil is of the view that demonstrating
export contingency does not require the construction of hypothetical sales ratios. Brazil submits
that whether a measure is de facto contingent upon export performance depends on the conditions
that are in law or in fact imposed at the time of granting the subsidy , and that this analysis should
not be limited to the effect on sales ratios.

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ANNEX D-3
EXECUTIVE SUMMARY OF THE STATEMENT OF
BRAZIL AT THE PANEL MEETING
I. INTRODUCTION
1. In its oral intervention Brazil focused on two main issues that it considers of particular
relevance:
 The scope of the obligation under Article 7.8 to withdraw the subsidy or take appropriate
steps to remove the adverse effects of the subsidy;
 The scope of this Article 21.5 proceeding in light of the panel’s decision of March 27, 2013.
II. THE OBLIGATION TO "WITHDRAW THE SUBSIDY " OR TO TAKE "APPROPRIATE
STEPS TO REMOVE THE ADVERSE EFFECTS" REQUIRES CAREFUL CON SIDERATION
WHEN EXAMINING PAST SUBSIDIES
2. The overriding issue in this compliance proceeding regards the question of how a defendant
should comply with the obligation of Article 7.8 of the SCM Agreement to "take appropriate steps
to remove the adverse effects " or "to withdraw the subsidy." Brazil reaffirms its views put forth in
its submission that, usually , this obligation re quires that a Member take affirmative, appropriate
action to remove the adverse effects of the subsidy or to withdraw that subsidy, as the Appellate
Body found in US – Upland Cotton.1

3. Yet, Brazil understands that in order to properly address this iss ue, different scenarios may
be taken into consideration by implementation panels:

Scenario A: A portion of the subsidy (LA/MSF) has been disbursed, the aircraft development
project is ongoing, and no royalty payments have been made. In this situation, the
responding Member could simply withdraw the subsidy by modifying the terms and
conditions of the remaining disbursements and royalty payments so that they reflect market
conditions. If the Member were to choose, instead, to remove the adverse effects of t he
subsidy, the Member may find that other steps are appropriate.

Scenario B: The subsidy (LA/MSF) has been fully disbursed, but part of the royalty payments
remain outstanding. T he recipient therefore has already received the entire financial
contribution, but there is still an opportunity for the responding Member to withdraw the
"prospective portion " of the subsidy by modifying the terms of the outstanding royalty
payments to reflect market conditions.

Scenario C: LA/MSF has been fully disbursed and all of the royalty payments have been paid
in full. This scenario poses a greater challenge for it seems that the only way that the
responding Member could withdraw the subsidy would be to seek repayment of the benefit
already received from and repaid by t he recipient company. We recall, for instance, that in
the Australia – Leather dispute (DS126), the panel recommended that withdrawal of a
subsidy that had already been disbursed required the repayment of the subsidy. Yet this
recommendation was criticized by various Members as being an inappropriate "retroactive"
remedy, not covered by Article 7.8.

4. Given these complexities, one way out could be to restate the "genuine and substantial "
relationship analysis (between the granting of a subsidy and its ad verse effects) in order to
evaluate the concrete effects of past subsidies, which have been fully disbursed and repaid. If the
causal pathways which led to a situation of adverse effects through the use of subsidies can no
longer be established, and other causal factors have since intervened significantly, there may be

1 Appellate Body Report, United States – Subsidies on Upland Cotton – Recourse to Article 21.5 of the
DSU by Brazil, WT/DS267/AB/RW, adopted 20 June 2008, DSR 2008:III, 809 ("US – Upland Cotton
(Article 21.5 – Brazil)"), para. 236.

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exceptional circumstances where the obligations of Article 7.8 may prove difficult to comply with.
In the current proceedings, the AB conceded, for instance, that "LA/MSF for the A300 and A31 0
are likely to cause minimal, if any, adverse effects during the reference period 2001-2006."2

5. Brazil is of the view that this panel has an important opportunity to clarify how Members are
expected to comply with rulings on adverse effects relating to non-recurring subsidies, which have
sometimes been granted many years ago and fully disbursed, but which may continue to cause
adverse effects in the market, taking into account that the main goal of compliance with the
subsidies disciplines is to restore the level playing field.

III. THE SCOPE OF ARTICLE 21.5 PROCEEDINGS CAN NOT BE USED TO RE -LITIGATE
CLAIMS DECIDED BY THE APPELLATE BODY
6. Brazil recognizes that it is for the compliance panel to determine the appropriate scope of its
own jurisdiction and that an overly narrow approach to an Article 21.5 panel’s terms of reference
would undermine the effectiveness of the dispute settlement process. It believes, however, that it
is also important that compliance proceedings not be used as an instance to re -litigate matters
that were decided by the Appellate Body. This would amount to use it as a "remand" proceeding
not foreseen in the Dispute Settlement Understanding.

7. In this sense, in the absence of reasons underpinning the preliminary decision, on
March 27, 2013, that included in its jurisdiction the claims regarding the A380 as an export
subsidy, Brazil would expect the panel to exercise its jurisdictional powers carefully in order to
prevent it from re-analyzing claims already rejected by the Appellate Body.

8. In any case, Brazil once again insisted that demonstrating de facto export contingency
should not require evidence of a hypothetical sales ratio -scenario such as the one that the
United States has provided to the panel. It should require rath er examining the total configuration
of facts surrounding the granting of the subsidy.

2 Appellate Body Report, EC and Certain Member States – Large Civil Aircraft, para. 1241.

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ANNEX D-4
EXECUTIVE SUMMARY OF THE WRITTEN
SUBMISSION OF CANADA
I. INTRODUCTION

1. Canada is participating in these compliance proceedings because the findings of the Panel
will have important consequences for the way in which the Understanding on Rules and Procedures
Governing the Settlement of Disputes (DSU) and the Agreement on Subsidies and Countervailing
Measures (SCM Agreement) are interpreted and applied in future disputes.

II. PROHIBITED EXPORT SUBSIDIES

2. The United States has failed to demonstrate that Launch Aid/Member State Financing
(LA/MSF) for the A380 and A350XWB granted by France, Germany, Spain and the United Kingdom
is contingent in fact upon export performance in violation of Article 3.1(a) of the SCM Agreement.

3. In the initial proceedings in this dispute, the Appellate Body established the following test to
determine whether a subsidy is de facto contingent on anticipated exportation: "is the granting of
the subsidy geared to induce the promotion of future export performance by the recipient?"

4. The Appellate Body held that the standard for de facto export contingency would be met
when "the subsidy is granted so as to provide an in centive to the recipient to export in a way that
is not simply reflective of the conditions of supply and demand in the domestic and export markets
undistorted by the granting of the subsidy". According to the Appellate Body, de facto export
contingency "m ust be inferred from the total configuration of the facts constituting and
surrounding the granting of the subsidy".

5. The United States fails to explain how the total configuration of the facts constituting and
surrounding the grant of LA/MSF supports its position. Moreover, as indicated below, the
United States' calculation of ratios does not accord with the framework set out by the Appellate
Body.

A. THE UNITED STATES USES WRONG INFORMATION WHEN CALCULATING RATIOS

6. The Appellate Body provided a framework for assessing whether the granting of a subsidy is
in fact tied to anticipated exportation: "where relevant evidence exists, the assessment could be
based on a comparison between, on the one hand, the ratio of anticipated export and domestic
sales of the subsidized product that would come about in consequence of the granting of the
subsidy, and, on the other hand, the situation in the absence of the subsidy". The United States
uses the terms "anticipated ratio" (the anticipated ratio of export sales to domestic sales for the
subsidized product) and "baseline ratio" (the ratio of export sales to domestic sales in the absence
of a subsidy) to describe the ratios used.

7. With respect to the anticipated ratio, the United States' reliance on the Airbus 2000 Global
Market Forecast is inappropriate because the GMF does not provide a forecast for the specific
subsidized product (A380), as required by the Appellate Body, but rather provides a forecast for
the entire class of very large aircraft.

8. The United States also uses wrong information when calculating the baseline ratio. With
respect to the calculation of the baseline ratio, the Appellate Body held that "the assessment must
be on the basis of historical sales of the same product by the reci pient in the domestic and export
markets before the subsidy was granted". The United States fails to demonstrate how the use of
historical sales data for the Boeing 747 and Boeing 777 are appropriate substitutes in the absence
of historical sales data for the A380 and A350XWB, respectively.

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B. THE UNITED STATES' POSITION DOES NOT ACCOUNT FOR CHANGES IN MARKET CONDITIONS

9. In comparing the anticipated and baseline ratios for both the A380 and A350XWB, the
United States does not address whether, apart from the existence of LA/MSF, all other relevant
factors remain the same. In fact, the United States provides evidence that suggests that it is more
likely a change in market conditions, rather than subsidization, that accounts for the anticipated
increase in export sales relative to domestic sales in the very large aircraft market segment.

III. IMPORT-SUBSTITUTION SUBSIDIES

10. The United States claims that LA/MSF for the A380 and the A350XWB is contingent upon the
use of domestic over imported goods as certain LA/MSF requirements oblige Airbus to use Airbus -
produced intermediate goods in the production of its finished aircraft.

11. The prohibition in Article 3.1(b) of the SCM Agreement covers situations where the granting
of a subsidy is contingen t on the recipient purchasing domestic over imported goods. In Canada's
view, the United States' position improperly expands the scope of Article 3.1(b) to cover subsidies
contingent on the recipient producing a particular intermediate good.

12. Given t hat most manufacturers produce intermediate goods as part of the production of
their final goods, the United States' position would negate the right of a subsidizing Member to
require a subsidy recipient to produce goods, as defined by the subsidizing Memb er, in its territory
in order to receive a subsidy.

13. The Appellate Body decision in Canada – Autos demonstrates that the United States' position
is incorrect.

IV. SERIOUS PREJUDICE

14. The United States takes the position in these compliance pr oceedings that the European
Union has neither withdrawn the subsidies nor removed their adverse effects. The United States
submits that LA/MSF provided for all Airbus aircraft is still causing serious prejudice given that
without LA/MSF, the Airbus aircraf t at issue would not be in the market to the same extent and
Boeing's sales would therefore be higher.

15. Canada submits that this Panel should limit its serious prejudice analysis to an assessment
of the impact of the subsidies existing at the end of the reasonable period of time the European
Union had to comply with the Dispute Settlement Body's (DSB) recommendations.

16. Canada sets out below the legal framework that this Panel should use in assessing whether
the European Union complies with its o bligations under Articles 5, 6 and 7.8 of the SCM
Agreement. Canada also makes observations as to how this framework should be applied to the
facts of this dispute.

17. Article 7.8 of the SCM Agreement provides that when a panel or the Appellate Body fi nds
that a subsidy has resulted in adverse effects to the interests of a complaining Member, the
subsidizing Member must either withdraw the subsidy or remove its adverse effects. These
alternatives provide a logical remedy to a Member's breach of its obli gations under Articles 5 and
6. If a Member chooses the first option, there is no longer a subsidy. If a Member chooses the
second option, although the subsidy may still be present, it no longer causes adverse effects.

18. Canada examines each of these two options below.

A. WITHDRAWAL OF SUBSIDY

19. By withdrawing a subsidy that was found to cause serious prejudice, a Member complies
with its obligations under Articles 5, 6 and 7.8 of the SCM Agreement. Article 1.1 of the SCM
Agreement defines a su bsidy as a financial contribution (or any form of income or price support)
that confers a benefit. The Appellate Body in Brazil – Aircraft (Article 21.5 – Canada) indicated that
"withdrawal" of a subsidy refers to the "removal" or "taking away" of that sub sidy. Given the
bipartite nature of its definition, a subsidy may be withdrawn by removing either the financial
contribution or the benefit.

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20. In this dispute, the United States acknowledges that the European Union actually withdrew
an infrastructure -related subsidy by increasing the fee charged to Airbus for using the Bremen
airport runway. The fact that the European Union properly withdrew the subsidy by removing the
benefit that it would otherwise have conferred in the future, but without removing t he benefit it
conferred in the past, is consistent with the prospective nature of remedies in WTO compliance
proceedings.

21. There are similarities between the situation where the benefit provided by a subsidy has
expired and that where the benefit has been withdrawn. In both cases, a benefit is no longer being
conferred on the recipient and, as a result, a subsidy no longer exists. Therefore, if a subsidy has
expired, the Member should also be found to have complied with its obligations.

22. In these compliance proceedings, the United States argues that all LA/MSF provided for
Airbus aircraft continues to cause serious prejudice to the interests of the United States in the
form of lost sales and market displacement and impedance suffered by Boeing. Ca nada submits
that, when LA/MSF for a given aircraft model has been withdrawn or the benefit provided by that
LA/MSF has expired, LA/MSF provided for that aircraft model cannot be found to cause serious
prejudice.

B. REMOVAL OF THE ADVERSE EFFECTS

23. When a subsidy has been found to cause serious prejudice and the subsidy has neither
expired nor been withdrawn, Article 7.8 of the SCM Agreement requires the subsidizing Member to
remove the serious prejudice. In other words, the subsidizing Member shoul d ensure that the
subsidy no longer causes serious prejudice.

24. Canada submits that only subsidies that have neither expired nor been withdrawn by the
end of the reasonable period of time provided to a Member to implement DSB recommendations
should serve as the basis of the analysis of serious prejudice in compliance proceedings. There
must be consistency between the two options available to a Member under Article 7.8 of the SCM
Agreement, namely, a Member must either withdraw the subsidies that cause adverse effects or
remove the adverse effects caused by those subsidies, by the end of the reasonable period of time
it has to comply with the DSB recommendations. If a subsidy has been withdrawn or has expired,
a Member cannot be asked to remove the adverse effects of that subsidy.

25. Once the subsidies at issue in the compliance proceedings have been identified, the panel
should proceed with its causation analysis to assess whether the identified subsidies cause serious
prejudice to the interests of the complaining Member.

26. As is the case in initial proceedings, the proper method to make this assessment in
compliance proceedings is to conduct a counterfactual analysis to determine what would be the
situation in the absence of the subsidies at iss ue. Therefore, a compliance panel should analyse
what the situation would be if these subsidies had been withdrawn. It is only if a panel finds that
the subsidies cause serious prejudice or threaten to cause serious prejudice that a subsidizing
Member should be found to violate Articles 5, 6 and 7.8 of the SCM Agreement.

27. In the single -aisle Large Civil Aircraft (LCA) product market, this Panel should first
determine whether there were any subsidies still existing with respect to the A320 at the end o f
the reasonable period of time. Second, if there were subsidies still existing, the Panel should
determine the impact of these subsidies and whether they cause serious prejudice.

28. With respect to the Very Large Aircraft product market, Canada disagr ees with the European
Union that the purpose of the Panel's counterfactual analysis should be to determine whether in
the absence of LA/MSF for the A380 this aircraft would still have been launched.

29. Canada submits that the proper counterfactual anal ysis consists in assessing what the
situation would be if the European Union had withdrawn the subsidy by the end of the reasonable
period of time. The withdrawal could have been performed by increasing the rate of return on the
A380 LA/MSF to a market level.

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30. Canada's observations with respect to the proper counterfactual analysis to perform in the
Very Large Aircraft product market also apply to the twin -aisle LCA product market. If LA/MSF for
the A350XWB constitutes a subsidy, the Panel should focu s on the impact that the withdrawal of
that subsidy by the end of the reasonable period of time would have had on the twin -aisle LCA
product market.

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ANNEX D-5
EXECUTIVE SUMMARY OF THE STATEMENT OF
CANADA AT THE PANEL MEETING
I. INTRODUCTION
1. In our statement, we first address issues related to the conduct of a serious prejudice
analysis in compliance proceedings. We then consider the United States' claims that certain Launch
Aid/Member State Financing (LA/MSF) constitutes a prohibited export subsidy or import -
substitution subsidy.
II. LEGAL FRAMEWORK TO USE IN DETERMINING COMPLIANCE WITH ARTICLE 7.8 OF
THE SCM AGREEMENT
2. In its written submission, Canada has set out the legal framework a panel should use in
determining whether a subsidizing Member has complied with its obligations under Article 7.8 of
the SCM Agreement. The United States and the European Union have set out certain arguments
before the Panel that are inconsistent with that framework.
3. Pursuant to Article 7.8 of the Agreement on Su bsidies and Countervailing Measures (SCM
Agreement), where a panel or an Appellate Body report is adopted in which it is determined that a
subsidy has resulted in adverse effects, the subsidizing Member shall take appropriate steps to
remove the adverse ef fects or withdraw the subsidy. The wording of this provision is clear: the
subsidizing Member must either withdraw the subsidy or remove its adverse effects. These are two
distinct alternatives, each of which can lead to compliance.
4. The first alternativ e available to a Member facing obligations under Article 7.8 of the SCM
Agreement is to withdraw the subsidy. As we know, Article 1.1 of the SCM Agreement defines a
subsidy as a financial contribution that confers a benefit. That is, without a financial co ntribution
that confers a benefit, there is no subsidy. Yet, the United States argues that a subsidy can only
be withdrawn if the benefit is withdrawn. This ignores the bipartite nature of the definition of a
subsidy. The withdrawal of the financial contri bution that has given rise to a benefit should,
necessarily, also amount to the withdrawal of the subsidy.
5. An example illustrates Canada's position. Let us consider a loan provided to a recipient at an
interest rate below that available on the market. The increase in the interest rate to market level
would constitute withdrawal of the benefit. The reimbursement of the capital by the recipient
would, in effect, constitute withdrawal of the financial contribution. Moreover, in this latter case, a
benefit would no longer be conferred. Indeed, a recipient cannot be said to benefit from a loan that
is no longer outstanding. Therefore, whether through an increase in interest rate or the
reimbursement of the loan, the subsidy would be withdrawn.
6. The effect o f the expiry of the benefit conferred by a financial contribution is equivalent to
that of the withdrawal of a benefit. In both cases, there is no longer a benefit, nor a subsidy. In
both cases, the Member that provided the subsidy should be found to have complied with its
obligations under Article 7.8 of the SCM Agreement.
7. The second alternative available to a Member facing obligations under Article 7.8 of the SCM
Agreement is to remove the adverse effects of the subsidy.
8. Determining whether "removal " has taken place requires a panel to assess whether the
subsidies at issue cause serious prejudice. To make this assessment, a panel will have to, first,
identify the subsidies at issue and, second, conduct a counterfactual analysis to determine the
effects of those subsidies.
9. Canada submits that the only subsidies the effects of which must be assessed in compliance
proceedings under Article 7.8 are subsidies in existence at the end of the six -month
implementation period within which a subsidizing Member must remove adverse effects.

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10. In this dispute, the United States argues that a subsidizing Member must remove the effects
not only of subsidies outstanding at the end of that implementation period, but also those of
expired and withdrawn subsidies. Ad verse effects would always need to be removed. This
interpretation of Article 7.8 must be rejected given that it would render the option of withdrawing
the subsidy meaningless.
11. An examination of Articles 4.7 and 7.8 of the SCM Agreement further demonst rates the flaw
in the United States' position.
12. Article 4.7 specifies that a Member that provides a prohibited subsidy must withdraw that
subsidy. Although prohibited subsidies are generally seen as being, by their very nature, trade -
distortive, there is no requirement that the effects of a prohibited subsidy that may continue past
the withdrawal be removed.
13. For its part, as acknowledged by the United States, Article 7.8 provides separate options: a
subsidizing Member may withdraw the subsidy or remove its adverse effects.
14. With respect to both types of subsidies, prohibited and actionable, the withdrawal of the
subsidy is an appropriate remedy. If the withdrawal of a subsidy that is prohibited satisfies the
obligations of a Member, withdrawal of a subsidy that causes adverse effects should also be
satisfactory. Remedies against actionable subsidies cannot be more stringent than those against
prohibited subsidies.
15. The proper identification of the subsidies subject to the serious prejudice ana lysis will affect
the nature of the counterfactual analysis that must be conducted. The alternatives provided by
Article 7.8 shed light on this identification. If a subsidizing Member can satisfy its obligations under
Article 7.8 by withdrawing certain sub sidies before the end of the implementation period, it is
logical that, in assessing whether serious prejudice caused by subsidies has been removed, it is
the effect of these same subsidies that will be analysed.
16. The proper counterfactual analysis to p erform under Article 7.8 is, therefore, as follows: in
the absence of the subsidies that existed at the end of the implementation period, what would be
the situation of the relevant producers? That situation can then be compared to the actual
situation of the relevant producers in order to determine whether the subsidies have caused
serious prejudice.
17. The United States ' position does not accord with this analysis. In its submissions, the
United States argues that the Panel should take into account the e ffects of all LA/MSF provided to
Airbus even if some LA/MSF may have been withdrawn or have expired. The Panel should reject
the United States ' position and identify which subsidies existed at the end of the implementation
period. It is the effects of thos e subsidies – and those subsidies only – that should be analysed in
determining whether the European Union has complied with its obligation under Article 7.8 of the
SCM Agreement.
18. The counterfactual analysis presented by the European Union with respec t to the LA/MSF for
the A380 is also inconsistent with the analysis proposed by Canada. The European Union argues
that the Panel should assess whether, in the absence of the LA/MSF for the A380, the aircraft
would have been launched in 2000. This position overlooks the fact that, by withdrawing the
subsidy provided by the A380 LA/MSF, and other smaller subsidies, by the end of the
implementation period, the European Union would have satisfied its obligations under Article 7.8 of
the SCM Agreement. Taking th is fact into account, the proper counterfactual analysis should
instead be: what would be the situation of Airbus and Boeing in the market in which the A380
competes if the European Union had withdrawn the subsidy provided through the A380 LA/MSF by
December 1, 2011, for example by increasing the rate of return of the A380 LA/MSF to a market
level?
III. PROHIBITED EXPORT SUBSIDIES
19. The United States claims that LA/MSF for the A380 and A350XWB granted by France,
Germany, Spain and the United Kingdom is contingent in fact upon export performance in violation
of Article 3.1(a) of the SCM Agreement.

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20. In presenting its evidence the United States fails to explain how the total configuration of
the facts constituting and surrounding the grant of LA/MSF suppor ts its position. Moreover, the
evidence is based on a calculation of ratios that does not accord with the framework set out by the
Appellate Body.
21. In the initial proceedings in this dispute, the Appellate Body indicated that an assessment of
whether the granting of the subsidy is in fact tied to anticipated exportation could be based on a
comparison between, on the one hand, the ratio of anticipated export and domestic sales of the
subsidized product that would come about as a consequence of the grantin g of the subsidy
(anticipated ratio), and, on the other hand, the situation in the absence of the subsidy (baseline
ratio).
22. The United States uses the wrong information when calculating these ratios. For example,
with respect to the calculation of the baseline ratio, the Appellate Body held that "the assessment
must be on the basis of historical sales of the same product by the recipient in the domestic and
export markets before the subsidy was granted". The United States fails to demonstrate how the
use of historical sales data for the Boeing 747 and Boeing 777 are appropriate substitutes in the
absence of historical sales data for the A380 and A350XWB, respectively.
23. Moreover, in comparing the anticipated and baseline ratios for both the A380 and A 350XWB,
the United States does not address whether, apart from the existence of LA/MSF, all other relevant
factors remain the same. In fact, with respect to the very large aircraft market segment, the
United States provides evidence suggesting that it is m ore likely a change in market conditions,
rather than subsidization, that accounts for the anticipated increase in export sales relative to
domestic sales.
IV. IMPORT-SUBSTITUTION SUBSIDIES
24. Finally, Canada addresses the specific claim by the United Sta tes that LA/MSF for the
A350XWB is contingent upon the use of domestic over imported goods, given that certain LA/MSF
requirements oblige Airbus to use Airbus -produced intermediate goods in the production of its
finished aircraft.
25. The United States ' position improperly expands the scope of Article 3.1(b) of the SCM
Agreement to cover subsidies contingent on the recipient producing a particular intermediate good.
26. Nothing in the General Agreement on Tariffs and Trade or the SCM Agreement prohibits a
subsidizing Member from making the granting of a subsidy contingent on a recipient producing
goods in its territory. In fact, Article III:8(b) of GATT 1994 explicitly allows WTO Members to
provide subsidies only to their domestic producers.
27. Given that m any manufacturers produce intermediate goods as part of the production of
their final goods, the United States ' position would negate the right of a subsidizing Member to
require a subsidy recipient to produce goods, as defined by the subsidizing Member, i n its territory
in order to receive a subsidy.
28. As indicated in Canada 's written submission, the Appellate Body decision in Canada – Autos
demonstrates that the United States' position is incorrect.

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ANNEX D-6
EXECUTIVE SUMMARY OF THE
WRITTEN SUBMISSION OF CHINA
I. INTRODUCTION

1. In this submission, China will present its views on the following two issues:

(i) whether LA/MSF for the A350 XWB is within the terms of reference of these
compliance proceedings; and

(ii) whether claims that grants of LA/ MSF for the A380 and A350 XWB are prohibited
subsidies are within the terms of reference of these compliance proceedings.

II. LA/MSF FOR THE A350 XWB IS NOT WITHIN THE TERMS OF REFERENCE OF
THESE COMPLIANCE PROCEEDINGS

2. China submits that in order for a measure to be subject to review by an Article 21.5 panel, it
has to fall under one or more of the following: (i) a declared "measure taken to comply "; (ii) a
measure otherwise constituting a "measure taken to comply" because of its "express link" with the
DSB's recommendations and rulings made in the original proceedings; (iii) a measure not in itself
a "measure taken to comply" but having a "particularly close relationship" to the declared measure
taken to comply and the DSB's recommendations and rulings; and (iv) in a subsidy case, a
replacement subsidy which replaces the one found to be WTO -inconsistent in the original
proceedings. China notes that the alleged LA/MSF for the A350 XWB falls under none of the four
situations, and therefore is not within the terms of reference of these compliance proceedings.

1. Declared Measure Taken to Comply

3. In China's view, where a Member has adopted a measure to implement its obligations, and
has so declared, it is necessary for a compliance panel to review such a measure in order to
ascertain whether the measure at issue is actually in existence, and if so, whether it is compliant
with the covered agreement . In this dispute, there is no "measure taken to comply " declared by
EU in respect of A350 XWB. 1 Thus, the alleged LA/MSF for the A350 XWB could not possibly be
included in the terms of reference of these compliance proceedings for the reason that it is a
"declared" measure taken to comply.

2. Other Measures Taken to Comply

4. In light of the Appellate Body 's analysis in US –Lumber CVDs Final (Article 21.5) , other
measures may nevertheless constitute part of the "measures taken to comply" if an "express link"
exists between those measures and the DSB's recommendations and rulings. 2 China recalls that
no rulings or recommendations concerning the alleged LA/MSF for the A350 ha ve ever been made
in the original proceedings . Therefore, it is not possible for any measure, including the alleged
LA/MSF for the A350 XWB, to have an "express link" to the non-existing DSB's recommendations
and rulings concerning A350.

3. Other Measures Having a Particularly Close Relationship

5. In US – Zeroing (Article 21.5 – EC), the Appellate Body has made it clear that, a measure
not by itself a "measure taken to comply " may also fall within the scope of review under
Article 21.5 of the DSU if the required particularly close relationship exists between that measure
and the declared measures taken to comply and the DSB's recommendations and rulings.3

1 In the document circulated by EU ("EU Notification") regarding its implementation of the DSB's
recommendations and rulings, nowhere is any "measure taken to comply" regarding A350 (XWB) declared. See
EC – Large Civil Aircraft, Communication from the European Union, WT/DS316/17, dated 5 December 2011.
2 Appellate Body Report, US – Lumber CVDs Final (Article 21.5 – Canada), para. 68.
3 Appellate Body Report, US – Zeroing (Article 21.5 – EC), para. 204.

- D-17 -

6. As no relevant rulings or recommendations have ever been made concerning the LA/MSF for
the A350 in the original proceedings , EU bears no obligation to adopt any "measures taken to
comply" and indeed EU mentions none regarding A350 in the EU Notification. In this context, as
one end of the "particularly close relationship " – the declared measures taken to comply and the
DSB's recommendations and rulings – does not even exist, it is, therefore, impossible to establish
that any measure could have "a particularly close relationship" with this non-existing end.

7. The U.S. argues that, for the alleged LA/MSF for the A350 XWB, a "particularly close
relationship" could be established , not with the unestablished LA/MSF for the A350, but with
LA/MSF for all twin aisle LCA found to be inconsistent in the original proceedings.

8. However, China notes that, in the original proceedings, (i) the DSB 's findings on each
LA/MSF on the basis of individual Airbus LCA models shows that the respective LA/MSF measure
for each model is separate from and parallel to others; (ii) there were no findings on an "LA/MSF
Programme" allegedly covering all models of Airbus LCA, not to mention a particular "LA/MSF
Programme" for twin aisle LCA . Therefore, findings of a "particularly close relationship " regarding
such a measure ought to be conducted within the orbit of each individual LCA model.

9. Therefore, there is n o basis for the U.S. to assert that the LA/MSF for the A350 XWB has a
particularly close relationship to either LA/MSF for the A350, or all other LA/MSF for twin aisle LCA.

4. Replacement Subsidy

10. The U.S. relies on the Appellate Body's conclusion in US – Upland Cotton (21.5 – Brazil)4 to
assert that the alleged LA/MSF for the A350 XWB is within the terms of reference of these
compliance proceedings, because it is a replacement subsidy for any earlier WTO -inconsistent
LA/MSF measures that the EU claims to have withdrawn. However, the U.S. ignores that the facts
of US – Upland Cotton (21.5 – Brazil) are fundamentally different from those of the present
dispute.

11. Unlike the payments at issue in US – Upland Cotton (21.5 – Brazil), in the present dispute,
those LA/MSF measures for respective LCA models have not been found to be provided under the
same framework (a single "LA/MSF Programme "). In additio n, payments made under the
challenged LA/MSF are not recurring . Therefore, there is no factual basis to establish that the
alleged LA/MSF for the A350 XWB is a "replacement subsidy " in relation to "any earlier WTO -
inconsistent LA/MSF measures" which are actually all separate from and parallel to each other.

5. Excluding LA/MSF for the A350 XWB Circumvents the EU's Obligation

12. To assert that excluding the alleged LA/MSF for the A350 XWB from the terms of reference
of these proceedings circumvents the E U's obligation, the U.S. relies on a statement made by the
Appellate Body in US – Lumber CVDs Final (Article 21.5 – Canada) that "[limits on the claims ]
should not allow circumvention by Members by allowing them to comply through one measure,
while at the same time, negating compliance through another."5

13. However, China submits that this quoted statement was made in the process of Appellate
Body's integrated analysis of the "particularly close relationship" test. The U.S. incorrectly relies on
the all eged "circumvention" test, which is never a separate or distinct legal standard for
determining the scope of review under Article 21.5 proceedings.

4 Appellate Body Report, US – Upland Cotton (21.5 – Brazil), paras. 235-238.
5 Appellate Body Report, US – Lumber CVDs Final (Article 21.5 – Canada), para. 71, quoted in US First
Written Submission, Para. 163.

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III. CLAIMS THAT GRANTS OF LA/MSF FOR THE A380 AND A350 XWB ARE
PROHIBITED SUBSIDIES ARE NOT WITHIN THE TER MS OF REFERENCE OF THESE
COMPLIANCE PROCEEDINGS

1. The U.S. Claims against the LA/MSF for the A380

14. China recalls that, in Canada – Aircraft (Article 21.5 – Brazil), the Appellate Body opined
that, unlike any new measures that are, or should be taken to comply with the DSB 's
recommendations and rulings, the old and unchanged measures in the original proceedings are not
the appropriate subject of the Article 21.5 proceedings.6

15. Therefore, to the extent that the LA/MSF for the A380 remains unchange d ever since the
original proceedings and no new measure ha s been taken, the LA/MSF for the A380 shall not fall
under the terms of reference of these Article 21.5 proceeding s. Thus, claims against the LA/MSF
for the A380, including both the alleged export subsidies and the import substitution subsidies
claims, shall not be reviewed in these proceedings.

16. Specifically for the claim of alleged export subsidies, China is of the view that the U.S.
misapplies the legal standards established in US – OCTG (Article 21.5 – Argentina). In that case,
the fundamental reason for the Appellate Body to include an issue on which no findings have been
made in the original proceedings into the scope of review under Article 21.5 is that, the Appellate
Body found it to be part of the "measures taken to comply".7

17. In the present dispute, in contrast, there w ere no finding s and relevant DSB
recommendations and rulings made in the original proceedings on the alleged export subsidies
provided for the A380. As a result, no new measures have been taken by the EU regarding the
LA/MSF for the A380. Consequently, the U.S. argument that a party may simply raise an issue
with no findings in the original proceedings again in Article 21.5 proceedings does not stand in this
dispute.

18. From another perspective, it is noteworthy that the function of Article 21.5 proceedings
should not be confused with that of the original proceedings. To have an unchanged measure be
re-litigated in the Article 21.5 proceedings serves no extra procedu ral value because no further
recommendations will be made regarding that measure . Notably, it amounts to converting the
Article 21.5 proceedings into a remand procedure under which the complainant is granted a
second chance to challenge the same measure, and the respondent has to defend it anew. Clearly,
this is not the intended purpose of Article 21.5 proceedings.

2. The U.S. Claims against the LA/MSF for the A350 XWB

19. China has submitted above that the LA/MSF for the A350 is not within the terms of reference
of these proceedings. On the basis of the conclusion made by the Appellate Body in EC –Bed Linen
(Article 21.5 – India) that "if a claim challenges a measure which is not a 'measure taken to
comply', that claim cannot properly be raised in Articl e 21.5 proceedings"8, China further submits
that, the claims challenging the LA/MSF for the A350 XWB "cannot properly be raised in
Article 21.5 proceedings".

IV. CONCLUSION

20. In conclusion, China is of the opinion that,

(i) LA/MSF for the A350 XWB is not within the terms of reference of these compliance
proceedings, because it does not fall under any one of the following: (i) a measure
taken to comply declared by the EU, (ii) a measure otherwise constituting a
"measure taken to comply " because of its "express link " with the DSB's
recommendations and rulings made in original proceedings; (iii) a measure not in
itself a "measure taken to comply " but having a "particularly close relationship" to
the declared measure taken to comply and the DSB 's recommendations and

6 Appellate Body Report, Canada – Aircraft (Article 21.5 – Brazil), para. 36.
7 Appellate Body Report, US – OCTG (Article 21.5 – Argentina), para. 143-145, 146 and 152.
8 Appellate Body Report, EC – Bed Linen (Article 21.5 – India), para. 78.

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rulings; and (iv) a replacement subsidy which replaces the one found to be WTO -
inconsistent in the original proceedings.

(ii) Claims that grants of LA/MSF for the A380 and A350 XWB are prohibited subsidies
are not within the terms of reference of these compliance proceedings, because for
LA/MSF for the A380, it is unchanged ever since the original proceedings and
should not be brought into the Article 21.5 proceedings. The U.S. arguments in
this respect do not stand and are difficult to reconcile with the objectives and aims
of Article 21.5 of the DSU. For claims regarding LA/MSF for the A350 XWB,
because the measure itself – the LA/MSF for the A350 XWB – is not within the
terms of reference of Article 21.5 proceedings, any claims challenging that
measure shall not be reviewed in these proceedings.

- D-20 -

ANNEX D-7
EXECUTIVE SUMMARY OF THE STATEMENT OF
CHINA AT THE PANEL MEETING
1. Mr. Chairman, members of the Panel, it is my honor to appear before you today to present
the views of China as a third pa rty. In this oral statement, China will focus its views on whether
LA/MSF for the A350 XWB, and the claim that grants of LA/MSF for the A350 XWB are prohibited
subsidies, are within the terms of reference of these compliance proceedings.
2. China submits that in order for a measure to be subject to review by an Article 21.5 panel, it
has to fall under one or more of the following: (i) a declared "measure taken to comply "; (ii) a
measure otherwise constituting a "measure taken to comply" because of its "express link" with the
DSB's recommendations and rulings made in the original proceedings; (iii) a measure not in itself
a "measure taken to comply" but having a "particularly close relationship" to the declared measure
taken to comply and the DSB's recommendations and rulings; and (iv) in a subsidy case, a subsidy
which replaces the one found to be WTO-inconsistent in the original proceedings.
3. China notes that the alleged LA/MSF for the A350 XWB falls under none of the four
situations, and therefore is not within the terms of reference of these compliance proceedings.
4. First, in China's view, where a Member has adopted a measure to implement its obligations,
and has so declared, it is necessary for a compliance panel to review such a measure . In this
dispute, there is no "measure taken to comply" declared by EU in respect of A350 XWB. Thus, the
alleged LA/MSF for the A350 XWB could not possibly be included in the terms of reference of these
compliance proceedings for it's a "declared" measure taken to comply.
5. Second, in light of the Appellate Body 's analysis in US –Lumber CVDs Final (Article 21.5) ,
other measures may nevertheless constitute part of the "measures taken to comply" if an "express
link" exists between those measures and the DSB's recommendations and rulings. 1 China recalls
that no rulings or recommendations concerning the alleged LA/MSF for the A350 ha ve ever been
made in the original proceedings. Therefore, it is not possible for any measure, including the
alleged LA/MSF for the A350 XWB, to have an "express link " to the non -existing DSB 's
recommendations and rulings concerning A350.
6. Third, according to the Appellate Body in US – Zeroing (Article 21.5 – EC), a measure not
by itself a "measure taken to comply" may fall within the scope of review under Article 21.5 of the
DSU, and the prerequisites are (i) the establishment of a "particularly close relationship"; and (ii)
such relationship must exist between, on the one hand, the measure at issue, and on the other,
the declared measures taken to comply and the DSB's recommendations and rulings.2
7. In the original proceedings, no rulings or recommendations have ever been made concerning
the LA/MSF for the A350. Thus, EU bears no obligation to adopt any "measures taken to comply "
and indeed EU mentions none regarding A350 in the EU Notification. In this context, as one end of
the "particularly close relationship " – the declared measures taken to comply and the DSB's
recommendations and rulings – does not even exist, it is, therefore, impossible to establish that
any measure could have a "particularly close relationship" with this non-existing end.
8. While putting quite much strength on the close relationship test itself, the U.S. does not
seem to care enough about where such a relationship should be established. The U.S. simply
stresses that, by comparing the nature, effects and timing, a particularly close relationship has
been established between the alleged LA/MSF for the A350 XWB, and LA/MSF for twin aisle LCA, or
even "all previous LA/MSF grants".
9. However, China notes that, in the original proceedings, (i) the DSB 's findings on each
LA/MSF on the basis of individual Airbus LCA models shows that the respective LA/MSF measure

1 Appellate Body Report, US – Lumber CVDs Final (Article 21.5 – Canada), para. 68.
2 Appellate Body Report, US – Zeroing (Article 21.5 – EC), para. 204.

- D-21 -

for each model is separate from and parallel to others; and (ii) there were no findings on an
"LA/MSF Programme " allegedly covering all models of Airbus LCA, not to mention a particular
"LA/MSF Programme" for twin aisle LCA . Therefore, findings of a "particularly close relationship "
regarding such a measure ought to be conducted within the orbit of each individual LCA model.
10. Therefore, there is n o basis for the U.S. to assert that the LA/MSF for the A350 XWB has a
particularly close relationship to either LA/MSF for the A350, or LA/MSF for twin aisle LCA, or "all
previous LA/MSF grants".
11. The U.S. assertions effectively disregards the Appellate Body 's explicit instruction that the
close relationship should be established with "the declared measures taken to comply and the
DSB's recommendations and rulings ". Inevi tably, it would overly expand the scope of these
compliance proceedings and cause imbalance between the competing interest in prompt
settlement of disputes and the interest in due process.
12. Fourth, the U.S. also relies on the Appellate Body's conclusion in US – Upland Cotton (21.5
– Brazil)3 to assert that the alleged LA/MSF for the A350 XWB is within the terms of reference of
these compliance proceedings, because it is a replacement subsidy for any earlier WTO -
inconsistent LA/MSF measures that the EU cl aims to have withdrawn. However, the U.S. ignores
that the facts of US – Upland Cotton (21.5 – Brazil) are fundamentally different from those of the
present dispute.
13. Unlike the payments at issue in US – Upland Cotton (21.5 – Brazil), in the present dis pute,
those LA/MSF measures for respective LCA models have not been found to be provided under the
same framework (a single "LA/MSF Programme "). In addition, payments made under the
challenged LA/MSF are not recurring . Therefore, there is no factual basis to establish that the
alleged LA/MSF for the A350 XWB is a "replacement subsidy " in relation to "any earlier WTO -
inconsistent LA/MSF measures" which are actually all separate from and parallel to each other.
14. Finally, to assert that excluding the alleg ed LA/MSF for the A350 XWB from the terms of
reference of these proceedings circumvents the EU 's obligation, t he U.S. relies on a statement
made by the Appellate Body in US – Lumber CVDs Final (Article 21.5 – Canada) that "[limits on
the claims] should not allow circumvention by Members by allowing them to comply through one
measure, while at the same time, negating compliance through another."4
15. However, China submits that this quoted statement was made in the process of Appellate
Body's integrated analysis of the "particularly close relationship" test. The U.S. incorrectly relies on
the alleged "circumvention" test, which is never a separate or distinct legal standard for
determining the scope of review under Article 21.5 proceedings.
16. In light of the above, China submits that the LA/MSF for the A350 is not within the terms of
reference of these proceedings. Further, on the basis of the conclusion made by the Appellate
Body in EC – Bed Linen (Article 21.5 – India) that "if a claim challenges a measur e which is not a
'measure taken to comply ', that claim cannot properly be raised in Article 21.5 proceedings "5,
China submits that the claims challenging the LA/MSF for the A350 XWB "cannot properly be
raised in Article 21.5 proceedings".
17. In conclusion, China is of the opinion that, LA/MSF for the A350 XWB is not within the
terms of reference of these compliance proceedings, because it does not fall under any one of the
four possible ways by which a measure may be reviewed by the compliance Panel. B ecause the
measure itself – the LA/MSF for the A350 XWB – is not within th e terms of reference of
Article 21.5 proceedings, any claims challenging that measure shall not be reviewed in these
proceedings.

3 Appellate Body Report, US – Upland Cotton (21.5 – Brazil), paras. 235-238.
4 Appellate Body Report, US – Lumber CVDs Final (Article 21.5 – Canada), para. 71, quoted in US First
Written Submission, Para. 163.
5 Appellate Body Report, EC – Bed Linen (Article 21.5 – India), para. 78.

- D-22 -

ANNEX D-8
EXECUTIVE SUMMARY OF THE
WRITTEN SUBMISSION OF JAPAN
I. FIRST ISSUE: THE UNITED STATES FAILS TO PRESENT A SUFFICIENT FACTUAL
BASIS FOR ITS CALCULATION OF ANTICIPATED AND BASELINE RATIOS

A. ANTICIPATED RATIO OF EXPORT TO DOMESTIC SALES OF A350 XWB AND A380 LACKS FACTUAL BASIS

1. Japan considers that the Panel should proceed cautiously with the United States' submission
that the sales data for the market in " Very Large Aircraft " (i.e., the Airbus A380 and the Boeing
747) are appropriate inputs for the calculation of the anticipated ratio1. The Appellate Body did not
recommend the use of data from the wider product market; only data pertaining to the subsidized
company itself is cited as relevant in the Appellate Body's Report. 2 In Japan's opinion, the
United States neither presents a compelling enou gh argument nor a sufficient factual basis to
support its submission that anticipated sales trends from the market for Very Large Aircraft should
be used as the basis for the anticipated ratio for the A380.

2. Moreover, in arguing that the Airbus report generates an anticipated ratio of 4:1 while the
equivalent report from Boeing demonstrates a 5:1 predicted ratio of exports to domestic sales 3,
the United States uses the former ratio with no explanation as to why the latter is validly
supportive of the former.4

3. Further, it would have been reasonable to assume at the time of granting the subsidies that
demand for Very Large Aircraft would be split between the Airbus A380 and the Boeing 747,
particularly given the latter's longstanding monopoly over the market for aircraft of a 400+
passenger capacity. On that ground, Japan is of the view that t he Panel should request that the
United States clarify the basis on which it assumes that Airbus would have anticipated sales of the
A380 in proportion to the size of the European and non -European markets respectively , because
the reality is that the market demand differs depending on the market . The United States’ sales
forecasts of the A380 are too remote to constitute sufficient prima facie factual evidence.5

4. Insofar as the United States' proposed anticipated sales ratio for the A350 XWB is
concerned, its arguments are also factually untenable. By examining Airbus' order book at the end
of 2009, the United States is interpreting the order trends before the subsidies had been granted
(i.e. the actual orders, before the alleged subsidies had been in operation). This information does
not correspond to the Appellate Body's finding that the necessary data should be based on Airbus'
anticipated performance at the tim e the subsidies were granted, not its actual performance
thereafter.6

B. BASELINE RATIO OF EXPORT TO DOMESTIC SALES OF A350 XWB AND A380 LACKS FACTUAL BASIS

5. As the Appellate Body conclu ded, the baseline ratio can be based either on the recipient's
historical sales data of the same product or, in the absence of such data, on what the performance
of a profit-maximizing firm would be expected to achieve hypotheti cally and without subsidiz ation
in the same market for the same product.7 However, in spite of the Appellate Body's findings, the

1 First Written Submission of the United States, European Communities and Certain Member States –
Measures Affecting Trade in Large Civil Aircraft: Recourse to Article 21.5 of the DSU by the United States
(DS316), 6 June 2012 [US First Written Submission], at paras. 183 - 185.
2 See Appellate Body Report, European Communities and Certain Member States – Measures affecting
Trade in Large Civil Aircraft, WT/DS316/AB/R [EC-Aircraft], at para. 1047, where the Appellate Body states
that "[t]he situation in the absence of the subsidy may be understood on the basis of historical sales of the
same product by the recipient in the domestic and export markets" [Underlining added].
3 US First Written Submission, at paras. 183 -185.
4 US First Written Submission, at para. 188
5 i.e. they cite only a quotation that foresees that "over half of the projected deliveries [of the A380 are]
expected to go to airlines domiciled in the Asia-Pacific region"; see US First Written Submission, at para. 185.
6 Appellate Body Report, EC-Aircraft, at para. 1049.
7 Appellate Body Report, EC-Aircraft, at para. 1047.

- D-23 -

United States has submitted that the sales data of Boeing's 747 constitute an appropriate baseline
ratio because it was the only comparable passenger aircraft before the launch of the A380.

6. Firstly, Japan notes th at there is no historical sales data of Airbus’ A380. The two models
could have different strengths and weaknesses , t heir producers may u tilize d ifferent mar keting
strategies for particular markets, and the markets have different consumer preferences. Other
factors which may cause differences in sales include aircraft pricing strategies, warranty coverage,
and maintenance needs, such as those linked to fleet interoperability. Accordingly, the market
outcome may differ between these products.

7. In this connection, Japan notes that the original panel and Appellate Body made findings of
actionable subsidies conferred by the United States on Boeing, including 747 Large Freight Aircraft.
Moreover, Boeing operated an effective monopoly in the 400+ passenger cap acity civil aircraft
market before the introduction of the A380 by Airbus . On these grounds, Japan considers the use
of data pertaining to Boeing’s 747 is not an appropriate source for the calculation of the baseline
ratio. The United States does not present any compelling reason or fact to support the hypothesis
that Airbus could have sold the A380 according to the same patterns and with the same export to
domestic sales ratio.

8. Japan repeats this same proposition in relation to the United States' prop osed baseline ratio
for the Airbus A350 XWB. Japan therefore considers: (i) that Boeing's actual historical sales trends
are therefore too remote to base an assumption of how Airbus would have behaved in the absence
of the subsidies; and (ii) that recourse to Boeing's historical data is not endorsed by the Appellate
Body's findings.

9. Secondly, Japan notes that the United States has undertaken the calculation of both ratios
using different data source s8, but has not explained why the comparison is valid d espite the
differences in data sources.

10. Lastly, Japan wishes to note that the input sales data used in the ratio calculations for both
the A380 and the A350 XWB are not contemporaneous.

C. HIGHER ANTICIPATED RATIO THAN BASELINE RATIO INCONCLUSIVE OF DE FACTO CONTINGENCY

11. As the Appellate Body pointed out, the fact that the subsidi zing governments anticipated a
proportional increase in export sales is insufficient to determine contingency, as the assessment on
this point should be objective rather than subjective.9

12. The Panel should recall that the Appellate Body stressed that the subsidy must cause
exports to behave in a way that "is not reflective of the conditions of supply and demand in the
domestic and export markets undistorted by the granting of the subsidy."10 The United States has
not pleaded that the trends pertaining to the export to domestic sales ratios have caused the
necessary distortion on the market. Therefore, Japan considers that, at present, the Panel should
contemplate that Airbus' rise in export sales in proportion to domestic sales either: (i) was not
necessarily the result of subsidi zation wh ose objective design and structure is to incentivize
exports; or (ii) may not be accountable for any distortion of the market for p assenger aircraft in
favour of exports.

II. SECOND ISSUE: LA/MSF FOR THE A380 AND A350 XWB ARE IMPORT
SUBSTITUTION SUBSIDIES

A. CONTINGENCY IN LAW UPON IMPORT SUBSTITUTION

13. Japan notes that the United States itself admits that " the requirement to pr oduce and use
domestic components was not explicit " with respect to German, Spanish and UK (and French)
LA/MSF for the A38011 and that with respect to LA/MSF for the A350 XWB, the United States does

8 US First Written Submission, at paras 183-188 and 194-199.
9 Appellate Body Report, EC- Aircraft, at para. 1050.
10 Appellate Body Report, EC-Aircraft, at para. 1045.
11 US First Written Submission, at para. 219.

- D-24 -

not argue that these measures are de jure inconsistent wit h Article 3.1(b) of the SCM
Agreement.12

14. Japan acknowledges that even if a challenged measure does not explicitly require the use of
domestic components, the subsidy contingent in law on the use of domestic over imported goods
could be found . In this c onnection, the Appellate Body explicitly confirmed that the standard for
establishing contingency in law, which can be derived by necessary implication from the words
actually used in the measure, under Article 3.1(a) of the SCM Agreement also applies for
establishing contingency under Article 3.1(b) of the SCM Agreement.13 However, Japan is of the
view that an overly broad interpretation to the notion of implicit contingency in law should not be
given for the following two reasons.

15. First, to establish implicit contingency in law, the Appellate Body made it clear that
"conditionality can be derived by necessary implication from the words actually used in the
measure."14 [Underlining added] As such, what matters are the words actually used in the
measure and not, as the United States appears to argue, factors not linked to the words actually
used in the measure such as the structure of Airbus' productive facilities, applications by Airbus for
LA/MSF from member States, press reports and other public discussions.

16. Second, as the original p anel already pointed out in EC – Aircraft, an overly broad
interpretation of the notion of implicit contingency in law would obfuscate the conditions for a
finding of contingency in law with the conditions for a finding of contingency in fact15.

B. CONTINGENCY IN FACT UPON IMPORT SUBSTITUTION

17. As far as concerns French, German, Spanish and UK LA/MSF for the A380 and the A350
XWB, the United States argues, as the main argument with respect to French LA/MSF and as an
alternative argument with respect to German, Spanish and UK LA/MSF, that these are subsidies
contingent in fact on the use of domestic over imported goods pursuant to Article 3.1(b) of the
SCM Agreement and therefore prohibited import substitution subsidies.

18. Japan considers that the Panel should apply, when examining whether the LA/MSF measures
granted to Airbus for the development of the A380 and the A350 XWB were contingent in fact
upon the use of domestic goods over imports, the same standard as th e Appellate Body set out in
EC – Aircraft with respect to de facto export contingency. In other words, whether the subsidies
granted to Airbus are/were in fact contingent upon the use of domestic over imported goods needs
to be determined by assessing the subsidy itself, in the light of the relevant factual measures such
as the design and the structure of the measure granting the subsidy; the modalities of operation
set out in the subsidy measure; and the relevant factual circumstances surrounding the granting of
the subsidy, and not on the basis of government motivation.

19. Japan is concerned that the standard of the permissibility of such subsidies based on a
government’s motivation risks being over -inclusive owing to overzealous drafting on the part of a
government. Motivation is therefore an inappropriate tool to determine the WTO -permissibility of
an alleged subsidy.

C. LINK BETWEEN THE LA/MSF MEASURES AND THE WORKSHARE AGREEMENTS

20. On the United States’ argument that the existence of workshare agreements was a condition
for the LA/MSF sub sidies to be granted to Airbus and therefore the LA/MSF measures constitute
impermissible import substitution schemes under Article 3.1(b) of the SCM Agreement, the Panel
should examine carefully whether a grant of the LA/MSF measures is indeed conditioned on the
existence of such workshare agreements and examine wh ether the workshare agreements indeed
required the use of domestic products over imported products. In this regard, the Panel sho uld
examine whether the recipients of the subsidie s at issue are conditioned by the workshare
agreements.

12 US First Written Submission, at para. 230.
13 Appellate Body Report, Canada – Certain Measures Affecting the Automotive Industry,
WT/DS139/AB/R, WT/DS142/AB/R, adopted 19 June 2000 [Canada – Autos], at para. 123.
14 Appellate Body Report, Canada – Autos, at para. 123.
15 See the panel's findings in para. 7.692-7.716 of its report in EC – Aircraft.

- D-25 -

21. In this connection, Japan wishes to point out that even if the Panel would find that the
workshare agreements are WTO-inconsistent agreements, this does not necessarily imply that the
LA/MSF measures at issue are by definition inconsistent with the EU's WTO commitments, since
there may not be a link between WTO -inconsistent workshare agreements and the granting of the
LA/MSF measures.

III. THIRD ISSUE: THE REMOVAL OF ADV ERSE EFFECTS IN THE CONTEXT OF ARTICLE
7.8 OF THE SCM AGREEMENT

A. JAPAN'S VIEW OF THE MEANING OF "REMOVAL" OF ADVERSE EFFECTS

22. Japan considers that the removal of adverse effects under Article 7.8 of the SCM Agreement
would mean: if the Member granting a beneficial financial contribution makes it no longer possible
for the grantee enterprise to use the benefits conferred by the financial contribution to lower the
sales price of its products, for example, by having the benefit returned to the grantor government,
then the adverse effects of the subsidies should be considered to have been removed . In this
situation, if the grantee enterprise is still commercially able to sell its products at a competitive
price, it would be, by definition, more economica lly efficient to allow it to do that, rather than to
disable it to do that.

23. This position is consistent with, and supported by, the Appellate Body ’s previous rulings in
EC-Aircraft, and US – Upland Cotton (Article 21.5 – Brazil)16.

B. THE REMOVAL OF ADVERSE EFFECTS AND THE CONTINUED EXISTENCE OF AIRBUS

24. In discussing what action the European Union should take to remove the adverse effects of
the subsidies at issue, t he United States repeatedly refers to the finding of the Appellate body in
EC - Aircraft that "[w]ithout LA/MSF, Airbus likely would not exist at all. "17 It appears that t he
United States effectively argues, or its argument is tantamount to arguing, that the adverse effects
cannot be removed as long as Airbus continues to exist, since Airbus would not exist in its present
form had it not received LA/MSF. This position seems to be extreme. Further, as noted above, it
appears unreasonable to request that Airbus cease to exist even if it has been rendered no longer
possible that Airbus will use the benefit conferred by the subsidies at issue to lower the sales
prices of its products.

25. The United States' assertion in the context of remedies that Airbus likely would not currently
exist but for the LA/MSF 18 is also at odds with the United Sta tes' submission in Australia –
Automobile Leather II (21.5 – US).19 In this case, the United States took a prospective, forward -
looking approach towards the remedy it sought under the SCM Agreement . By contrast , in the
present proceeding the United States appears to be fixated on the theoretical continued existence
of Airbus in the absence of receiving LA/MSF.

26. Therefore, Japan is apprehensive about the risk of establishing impossible standard for
"removal of adverse effects" in the context of Article 7.8 of the SCM Agreement.

16 Appellate Body Report, US – Upland Cotton (Article 21.5 – Brazil), WT/DS267/AB/RW, adopted
21 March 2005.
18 US First Written Submission, at para. 243 and 323.
19 Panel Report, Australia — Automotive Leather II (Article 21.5 — US), WT/DS126/RW, adopted
11 February 2000.

- D-26 -

ANNEX D-9
EXECUTIVE SUMMARY OF THE STATEMENT OF JAPAN
AT THE PANEL MEETING
I. WITHDRAWAL OF A SUBSIDY AND REMOVAL OF THE ADVERSE EFFECTS OF A
SUBSIDY
1. Pursuant to Article 7.8 of the SCM Agreement , a subsidizing government is required to
withdraw the subsidy or remove the adverse effects which still remain in the present. This
conclusion follows from the general principle that remedies in WTO law are generally understood to
be prospective in nature,1 which has been followed in numerous cases.

2. Japan would like to draw the Panel 's attention to the language of Article 7.8 of the SCM
Agreement. Under this provision, a Member has an option of either withdrawing the subsidy or
removing the adverse effects of the subsidy. It follo ws from the structure of this provision a
Member that has withdrawn the subsidies at issue is deemed to have take n appropriate steps to
remove the adverse effects within the meaning of this provision.

3. Japan further submits that assessing whether the s ubsidies at issue are presently causing
adverse effects requires a proper understanding of the "life" of subsidies, as referred to by the
Appellate Body. Under Article 1.1 of the SCM Agreement, a subsidy is deemed to exist if there is a
financial contribution by a government or any public body and a benefit is thereby conferred. As
the Appellate Body noted in Brazil – Aircraft, a financial contribution and benefit are two separate
legal elements, and both must exist for there to be subsidy.2

4. Given that under Article 1.1 of the SCM Agreement it is only when a financial contribution
confers a benefit that such a financial contribution qualifies as a subsidy, the structure of the SCM
Agreement demonstrates that the existence of a benefit is crucial for the ability of the subsidy
received by a recipient to cause adverse effects. Indeed, the SCM Agreement contemplates that
the recipient of subsidies, through utilizing the benefit, may cause adverse effects on the like
products of another Member. The Appellate Body in EC – Aircraft clearly held that the SCM
Agreement requires a finding of a "genuine and substantial relationship of cause and effect"
between the subsidy and the observed adverse effects.3

5. Japan notes that Article 7.8 of the SCM Agreement must be properly read to imply that the
subsidizing government discharges its obligation either by the removal of the financial contribution
or the benefit. The Appellate Body confirmed in EC – Aircraft by acknowledging the "basic
proposition that a subsidy has a life, which may come to an end, either through the removal of the
financial contribution and/or the expiration of the benefit." 4 Thus, in order to withdraw the subsidy
it should be asked how the benefit can be removed.

1. Removal of a Benefit
6. In respect of the removal of the benefit, Japan would like to comment on the expiration of
the benefit. The United States submits that the "the life of a product creation subsidy, like LA/MSF,
lasts at least as long as the commercial life of the product it crea tes, and beyond in certain
instances."5 Japan believes that this statement conflates the concepts of the "benefit" and "effect"
of a subsidy.

1 Appellate Body Report, US – Subsidies on Upland Cotton (Article 21.5 – Brazil), WT/DS267/AB/RW,
[US – Upland Cotton (Article 21.5 – Brazil)], at footnote 494 to para. 243.
2 Appellate Body Report, Brazil – Export Financing Program for Aircraft, WT/DS46/AB/R [Brazil –
Aircraft], at para. 157.
3 See Appellate Body Report, European Communities and Certain member States – Measures Affecting
Trade in Large Civil Aircraft, WT/DS316/AB/R, [EC – Aircraft], at para. 1232.
4 Ibid., at para. 709.

- D-27 -

7. First of all, u nder the SCM Agreement , a "benefit" is capable of being calculated and
quantified, and is expen dable over time. 6 At the time when a subsidy is granted, the subsidizing
government contemplates that this quantifiable and expendable "benefit" of the subsidy will
materialize and be consumed over a certain period of time to achieve the relevant policy
objectives. This approach falls squarely within the framework of the Appellate Body 's reasoning
that "at the time of the grant of a subsidy, the subsidy will necessarily be projected to have a finite
life and to be utilized over that finite period."7

8. Moreover, the Appellate Body has confirmed that the determination of a benefit under the
SCM Agreement is an ex ante analysis that does not depend on how the particular financial
contribution actually performed after it was granted. 8 Furthermore, the Appella te Body has
observed that "the nature, amount, and projected use of the challenged subsidy may be relevant
factors to consider in an assessment of the period over which the benefit from a financial
contribution might be expected to flow." 9 Consequently, for the analysis as to whether the benefit
has expired or ceased to exist, the materialization and consumption of the benefit usually are
functions of the policy objectives of subsidies as depicted in the structure and nature of any
particular subsidy.

9. In line with this proposition, the Appellate Body offered a number of factors which might be
used to assess the life of a benefit, including the period of time over which the subsidy is expected
to be used for future production .10 Japan submits that the weig ht allocated to each factor
mentioned by the Appellate Body would depend on the structure and nature of the particular
subsidy. For example, the period of time over which the subsidy is expected to be used to lower
the price levels of products may be relev ant for the assessment of the life of research and
development (R&D) subsidies. Japan understands that the function of R&D subsidies is, for
example, to lower, to the extent of the "benefit" amount, the sales price of products incorporating
the results of the research activities down to a competitive level. Even without such subsidies, the
recipient were able to conduct such research activities successfully, and sell such products at a
competitive level, a government would have little incentive to grant su bsidies. If, however, the
recipient had no technological potential to conduct the research activities successfully, neither
would a government have little incentive to grant subsidies. A government provides R&D subsidies
because the government considers th at the recipient has technological potential to conduct such
research activities successfully, but it will not be able to sell products incorporating the result of
the research activities at a competitive level.

10. This function of such R&D subsidies con templates that its benefit will normally be consumed
as the recipient accordingly sells the product for the development of which the subsidy was
provided at a price level which is lower than the anticipated price level in the absence of
subsidization. Consequently, when the "benefit" is consumed in full, the recipient will no longer be
able to lower price levels at the cost of further consuming the "benefit".

11. Japan would like to emphasize, however, that the assessment of the period of the life of the
"benefit" should focus on the projected period or sales amount properly anticipated by granting
Member when the subsidy is granted.

2. Removal of Adverse Effects

12. Japan doubts that, for the purposes of Article 7.8 of the SCM Agreement , a presently -
existing adverse effect may be found to exist if the "benefit" has been withdrawn or consumed and
the recipient is no longer able to lower the price of products by the benefit. Indeed, with respect to
R&D subsidies, the recipients can use new technology whic h has been invented by the subsidies,
even after its benefits have been removed or utilized. In Japan's view, however, the obligation to
remove adverse effects should normally be limited to the price effects of R&D subsidies.

13. As mentioned above, the s tructure of R&D subsidies is ultimately aimed at lowering
production costs so as to enable firms to lower prices to a level which is competitive in the
marketplace. The fact that a recipient has invented a particular technology likely reveals that it

6 See Article 14 of the SCM Agreement.
7 Appellate Body Report, EC – Aircraft, at para. 709.
8 Ibid., at para. 706.
9 Ibid., at para. 707.
10 Ibid.

- D-28 -

must have had a technological potential to do so, but merely could not afford to do so. In this
situation, the proper counterfactual is that the recipient, as a business entity, would have had to
offer products using newly -invented technology at a higher price (and consequently, would have
had more difficulty selling them in the market), rather than that the recipient could not have
invented that technology, and thus, that product.

14. Therefore, in Japan's opinion, a finding regarding adverse effects and seri ous prejudice
should stem primarily from the effects of the pricing policy of the firm in question with relation to
the subsidized products including those incorporating new technology for the development of
which the subsidy was granted , and not from the mere fact that new technology has been
invented.

15. In support of this proposition, Japan submits that the SCM Agreement contemplates that a
benefit would result in the reduction of costs of production and, therefore, cause price effects. In
particular, this reality is, inter alia , evident from the intended purpose of countervailing duties,
which effectively increase the import prices of subsidized imports. The WTO disciplines regarding
the determination of injury are equally informative in this regard. J apan directs the Panel 's
attention to Article 15.1 of the SCM Agreement and Article 15.2 of the SCM Agreement.

16. In Japan 's opinion, the adverse effects of subsidies enumerated in Article 5 of the SCM
Agreement are ultimately related to the ability of a recipient to charge lower prices by utilizing a
subsidy benefit. Therefore, Japan is of the view that it is necessary to examine carefully whether
the SCM Agreement further addresses any other effect of subsidies that may remain after their
benefit – i.e. their price effects – is accordingly consumed in full.

II. THE "ANTICIPATED EXPORT RATIO TEST"
17. The United States submits that the grants of LA/MSF for the A380 and the A350 XWB
constitute prohibited subsidies, since these grants are contingent in fa ct upon export performance
and relies on the "anticipated export ratio test" provided by the Appellate Body in EC- Aircraft,
whereby the ratio of anticipated export and domestic sales of the subsidized product that would
come about as a consequence of the granting of the subsidy is compared to the same ratio in the
absence of the subsidy.
18. While Japan prefers to refrain from submitting comments regarding whether the grants of
LA/MSF for the A380 and the A350 XWB are properly before the Panel, Japan has t wo concerns
with respect to the approach proposed by the United States. First, Japan is concerned that the
United States' claim regarding export contingency relies too heavily on market forecast data,
thereby raising doubts whether the United States has pr esented a sufficient prima facie factual
basis to support its claims. Second, Japan has a conceptual concern with respect to the
"anticipated export ratio" test as proposed by the United States.
1. Applicable Legal Framework
19. The Appellate Body clarif ied the standard for finding de facto export contingency under
Article 3.1(a) of the SCM Agreement in EC – Aircraft. The Appellate Body held that "anticipation" of
exports is in itself insufficient as proof that the granting of a subsidy is tied to the ant icipation of
exportation and established the following test: "is the granting of the subsidy geared to induce the
promotion of future export performance by the recipient?" 11 The Appellate Body subsequently
found that this test is met when "the subsidy is gr anted so as to provide an incentive to the
recipient to export in a way that is not simply reflective of conditions of supply and demand in the
domestic and export markets undistorted by the granting of the subsidy ."12 The Appellate Body
also explained that the existence of de facto export contingency must be inferred from the total
configuration of the facts constituting and surrounding the granting of the subsidy.13
20. The Appellate Body indicated that, where relevant evidence exists, the assessment of
whether the granting of a subsidy is geared to induce the promotion of future export performance
by the recipient could be based on a comparison between the ratio of anticipated export and

11 Ibid., at para. 1044.
12 Ibid., at para. 1045.
13 Ibid., at para. 1046.

- D-29 -

domestic sales of the subsidized product that would come about as a co nsequence of the granting
of the subsidy and the situation in the absence of the subsidy. The situation in the absence of the
subsidy may be understood on: (1) the basis of historical data; or (2) in the absence of
"untainted" historical data, on the perfo rmance that a profit -maximizing firm would hypothetically
be expected to achieve in the export and domestic markets in the absence of a subsidy.
2. Concerns Whether Sufficient Prima Facie Evidence has been Submitted
21. Japan notes that, in order to estab lish the "baseline ratio", the Appellate Body referred to
historical sales of the recipient firm or the performance that a profit -maximizing firm would
hypothetically be expected to achieve. 14 The data used by the United States to establish the
baseline ratio, is, however, not based on Airbus' historical sales data but on Boeing's sales of 747
and 777 aircraft. In this respect, Japan considers that Boeing's sales data pertaining to the 747
freight aircraft and 777 aircraft are "tainted by subsidies" insofar as Boeing was in receipt of
actionable subsidies during this period as per the WTO Panel's and Appellate Body's findings. Japan
thus questions whether Boeing's sales data can be used to establish the baseline.
22. Japan invites the Panel to carefully exami ne whether the United States has provided
sufficient prima facie evidence to support its claim that the grants of LA/MSF for the A380 and the
A350 XWB constitute prohibited export subsidies. In this regard, Japan recalls that the Appellate
Body itself inse rted a qualifier when presenting the numerical example to illustrate whether the
granting of a subsidy may be geared to induce promotion of future exports. The Appellate Body
made a comparison between the anticipated ratio of export and domestic sales with the baseline
ratio subject to the existence of "relevant evidence".15
3. Methodological Concern with Respect to the "Anticipated Export Ratio" Test
23. Japan also has a methodological concern with respect to the "anticipated export ratio" test.
To be clea r, Japan does not dispute that a subsidy measure providing recipients an incentive to
export products abroad rather than sell them on the domestic market is likely to increase the
anticipated ratio of export sales to domestic. However, the test posited by the United States may
result in a finding of de facto export contingency even in the absence of any incentive given to
recipients to increase the anticipated ratio of export sales to domestic sales when – because of
certain market developments, such as higher cross-price elasticity of demand on export markets –
the anticipated ratio of export sales to domestic sales is higher than the baseline ratio of export
sales to domestic sales.
24. The methodological concern Japan has in this respect is that the "anti cipated export ratio"
test as put forward by the United States in this proceeding reduces the standard for a finding of de
facto export contingency, as set out by the Appellate Body in EC – Aircraft, to a mere comparison
between the anticipated ratio and t he baseline ratio. Japan considers that this is not the
appropriate legal standard for establishing de facto export contingency. Japan recalls the legal
standard set out by the Appellate Body for determining de facto export contingency16 and that this
standard is met "when the subsidy is granted so as to provide an incentive to the recipient to
export in a way that is not simply reflective of the conditions of supply and demand in the
domestic and export markets undistorted by the granting of the subsidy."17
25. Whether a subsidy is geared to induce the promotion of future export performance " must be
inferred from t he total configuration of the facts constituting and surrounding the granting of the
subsidy"18 and the Appellate Body provided its relevant factors in this respect.19
26. Yet the "anticipated export ratio" test put forward by the United States hollows out the legal
standard set out by the Appellate Body to a simple comparison between the anticipated ratio and
the baseline ratio, even though the Appell ate Body was quite clear that "the standard for
determining [de facto export contingency] is an objective standard, to be established on the basis

14 Ibid.
15 Ibid., at para. 1047.
16 Ibid., at para. 1044.
17 Ibid., at para. 1045.
19 Ibid.

- D-30 -

of the total configuration of facts constituting and surrounding the granting of the subsidy ,
including the design, structure, and modalities of the measure granting the subsidy."20
27. Therefore, Japan submits that while a comparison between the anticipated ratio and the
baseline ratio may be one of the "facts constituting and surrounding the granting of the sub sidy",
it cannot be determinative of whether a given subsidy measure is de facto export contingent. In
this respect, Japan refers to the finding of the Appellate Body that "the assessment could be
based"21 on a comparison between the anticipated ratio and t he baseline ratio and that such a
comparison, if supported by evidence showing an incentive to skew anticipated sales towards
exports, "would be an indication "22 of de facto export contingency. Should the Panel endorse the
"anticipated export ratio" test to determine whether a subsidy is de facto export contingent, Japan
is concerned that such an endorsement may result in three unintended consequences.
28. First, allowing WTO Members to establish de facto export contingency based only on a
comparison between anticipated and baseline ratios would contradict the Appellate Body's previous
finding that "proving de facto export contingency is a much more difficult task [than proving de
jure export contingency]."23 Indeed, the Appellate Body in EC – Aircraft endorsed this conclusion
regarding the complexity of establishing de facto export contingency.24
29. Second, the importance of the baseline ratio in determining whether a subsidy is de facto
export contingent carries the risk that one and the same subsidy is consi dered de facto export
contingent if the baseline ratio is set in year/period X, whereas it is not considered de facto export
contingent if the baseline ratio is set in year/period Y. Indeed, due to changes in the market
situation, the ratio between exports and domestic sales in any given year or period may be
substantially different from any other year or period.
30. Third, WTO Members with small domestic markets, for whom changes in baseline ratios from
one year or period to another may be more pronounced, may be more vulnerable to a finding of de
facto export contingency compared to WTO Members with larger domestic markets. Japan believes
that all WTO Members, without regard to the size of their own domestic markets, should enjoy
equal treatment in terms of the restrictions on subsidies.
31. Therefore, Japan respectfully invites the Panel to examine the Appellate Body's findings set
out in EC – Aircraft, and particularly the explicit guidance that whether a subsidy is geared to
induce the promotion of the future export performance must be inferred from the total
configuration of the facts constituting and surrounding the granting of the subsidy, when assessing
whether the grants of LA/MSF for the A380 and the A350 XWB constitute prohibited export
subsidies.

22 Ibid. [Underlining added]
23 Appellate Body Report, Canada – Measures Affecting the Export of Civilian Aircraft, WT/DS70/AB/R, at
para. 167.
24 Appellate Body Report, EC – Aircraft, at para. 1038. [Underlining added]

- D-31 -

ANNEX D-10
EXECUTIVE SUMMARY OF THE STATEMENT OF THE REPUBLIC OF KOREA
AT THE PANEL MEETING
Mr. Chairman and members of the Panel,
1. The Republic of Korea ("Korea") appreciates this opportunity to present its views to the
Panel as a third party in th is dispute. The decision of the Panel in t his dispute will provide
important guidelines to the WTO Members in making their policy decisions and formulating their
respective government programs in a manner consistent with the relevant rules of the WTO.
2. While the parties to the dispute and third parties raise several important issues, Korea would
like to briefly focus on the following two systemic points. First point is whether this P anel's terms
of reference include LA/MSF for the A350XWB. Second point i s whether LA/MSF for the A380 and
the A350XWB constitutes subsidies contingent upon the use of domestic over imported goods,
prohibited under Article 3.1(b) of the SCM Agreement.
3. To begin with, we would like to note that the issue of a compliance Panel 's terms of
reference has a close bearing with the enforceability of the WTO Agreements. This is so, because a
compliance panel 's decision will have two significant aspects. On the one hand, a compliance
panel's decision is directly related to the security and predictability of the WTO dispute settlement
mechanism. Without a certain limitation on the scope of a compliance panel's terms of reference, a
complainant might want to re -litigate in a compliance proceeding issues it could and should have
claimed in the original proceeding. This virtual re -litigation would constitute an abuse of the
compliance proceeding by the complainant. On the other hand, a compliance panel should also
ensure that an implementing Member does not attempt to circumvent its obligati on to implement
the recommendations and rulings of the DSB, by being allowed to take essentially the same
measure simply because it was not included in the original proceeding.
4. In short, if a compliance panel 's terms of reference are overly broad, it ma y open a back
door for measures, which could and should have been included in the original panel proceeding
(but were excluded by a complainant), to come to a compliance proceeding. On the other hand,
should a compliance panel 's terms of reference be overl y narrow an implementing Member may
attempt to introduce a new measure which share the characteristics of the impugned measure in
all material respects, thereby effectively avoiding its obligation to comply with the
recommendations and rulings of the DSB. Thus, a balance should be struck between the two
competing considerations.
5. In determining the scope of terms of reference of the present proceeding, this Panel should
carefully examine and apply the WTO jurisprudence on this issue. In Korea 's view, WTO
jurisprudence accumulated so far offers important guidelines in this regard.
6. First of all, Korea notes that the WTO jurisprudence has acknowledged a panel 's broad
authority to identify measures taken to comply. The Appellate Body has ruled that panels have a
duty to examine issues of a "fundamental nature," issues that go to the root of their jurisdiction on
their own motion even if the parties to the dispute remain silent on those issues. 1 Where the
parties to the dispute identified measures, a compliance panel still has to determine which of the
measures listed in the request for its establishment are indeed "measures taken to comply. "2
Hence, the WTO jurisprudence has provided a compliance panel with extensive authority not
merely to be confined to the measures raised by the parties to the dispute.
7. That being said, the Appellate Body in US – Softwood Lumber IV (Article 21.5 - Canada)
provides us with a guideline directly on point. It considered measures other than the declared

1 Appellate Body Report, Mexico – Corn Syrup (Article 21.5), para. 36, quoted in US – Countervailing
Measures on Certain EC Products (Article 21.5 – EC), para. 7.35.
2 Appellate Body Report, EC – Bed Linen, para. 78.

- D-32 -

measures taken to com ply with an original WTO decision. According to the Appellate Body, terms
of reference of a compliance panel are not merely limited to the measures declared to comply by
an implementing party.3 It thus stated that "some measures with a particularly close r elationship
to the declared 'measure taken to comply ', and to the recommendations and rulings of the DSB,
may also be susceptible to review by a panel, acting under Article 21.5. "4 The Appellate Body
further opined that in order to determine whether there is a close relationship between the
declared measures taken to comply and other measures, a compliance panel must examine the
timing, nature, and effects of the other measures. 5 At the same time, a compliance panel must
also "examine the factual and legal background against which a declared 'measure taken to
comply' is adopted."6
8. It seems that the parties to this dispute and third parties all agree that the applicable test
here should be whether or not there exists a "close relationship," as pronounced by the Appellate
Body. Thus, the question is whether LA/MSF for the A350XWB meets the "close relationship" test.
As the Panel is well aware, examining the timing, nature, and effects of other measures poses
complex factual questions. Indeed, the parties mai ntain different positions regarding the timing,
nature and effects of other measures at issue, even if they agree upon the same legal test of
"close relationship." Thus, Korea requests the Panel to carefully review the facts of the dispute as
a trier of fa cts and determine whether LA/MSF for the A350XWB can be regarded as a measure
closely related to the measures taken to comply by the EU, in accordance with the jurisprudence of
the Appellate Body.
9. Secondly, another issue Korea would like to raise conce rns interpretation and application of
Article 3.1(b) of the SCM Agreement. The United States argues that LA/MSF for the A380 and the
A350XWB constitute prohibited subsidies because they are subsidies contingent upon the use of
domestic goods. Article 3.1(b ) of the SCM Agreement indeed prohibits "subsidies contingent,
whether solely or as one of several other conditions, upon the use of domestic over imported
goods."
10. In general, Korea agrees with the statement of the United States that "[i]f the receipt of a
subsidy requires a manufacturer to use domestically produced manufacturing inputs rather than
foreign manufacturing inputs, then the subsidy violates" Article 3.1(b).7 Korea believes that such a
statement appropriately encapsulates the object and pur pose of Article 3.1(b), which is to prevent
the profoundly distortive effect of an import substitution subsidy on international trade.
11. That being said, however, Korea submits that a careful scrutiny is necessary to determine
whether LA/MSF for the A380 and the A350XWB does fall under the situation of Article 3.1(b). In
Korea's view, it seems that the U.S. argument does not fully detail how the workshare agreements
among the Airbus countries required and imposed a condition upon the use of domestic over
imported goods. Although the U.S. concluded that the workshare agreement s "meant that the
access to the subsidy was contingent upon the use of domestic goods over imports ,"8 it does not
seem clear to us whether one could pinpoint a direct linkage between t he agreement s and a
condition to use domestic over imported goods within the meaning of Article 3.1(b). At most,
examples presented by the complainant seem to concern the Airbus countries' share, ownership
rights, and job creation – somewhat general discus sions and consideration of the participating
countries as opposed to some sort of specific conditions.
12. The situation of the UK provides a good example in this regard. T he United States argues
that through the workshare agreements "the UK government an ticipated that LA/MSF for the
350XWB would induce local production of particular large civil aircraft components, local
employment, and the use of domestically produced manufacturing inputs as a result of that local
employment."9 Put differently, the argum ent of local content substitution is basically premised
upon the alleged local employment. One would find it difficult, however, to see any direct linkage

3 Appellate Body Report, US – Softwood Lumber IV (Article 21.5 – Canada), para. 77.
4 Id.
5 Id.
6 Id.
8 Id. para. 239.
9 Id. para. 234.

- D-33 -

between the local employment and the alleged import substitution. C onsidering the strategic
features of the LCA industry and the highly confidential nature of the technolog ies involved, the
United States should first prove that there do exist substitutable parts that are being imported,
and that the LA/MSF program prevented Airbus from using such imported parts because of the
program. In our view, such a scheme does not seem to be reflective of the nature of the business
at issue here. In order to establish a direct linkage, therefore, it seems critical for the complainant
to prove why and how the local em ployment can be regarded as a specific condition for the
utilization of domestic goods over imported goods.
13. Again, Korea appreciates this opportunity to present its view and would be happy to take
questions you might have. Thank you.

- E-1 -

ANNEX E
RULINGS WITH RESPECT TO DSU ARTICLE 13 REQUEST
Contents Page
Annex E-1 The United States' Article 13 request of 20 July 2012 (Panel ruling issued on
4 September 2012)
E-2
Annex E-2 The European Union's Article 13 request of 23 November 2012 ( Panel ruling
issued on 14 December 2012)
E-10

- E-2 -

ANNEX E-1
THE UNITED STATES' ARTICLE 13 REQUEST OF 20 JULY 2012
(Panel ruling issued on 4 September 2012)
1. By letter dated 20 July 2012, the United States requests the Panel to exercise its authority
under Article 13 of the Understanding on Rules and Procedures governing the Settlement of
Disputes ("DSU") to seek information from the European Union with regard to specific assertions
allegedly made by the European Union in its first written submission.1
2. Specifically, the United States requests the Panel to seek the following four categories of
documents from the European Union, which the United States considers will assist the Panel in
evaluating the evidence before it and in clarifying and distilling the lega l arguments advanced by
the parties, particularly those of the European Union2:
a. All agreements (including all amendments, attachments, and exhibits) between any of
the EU member States and EADS/Airbus, related to the development and/or financing of
the Original A350 or A350XWB;
b. All applications for financing for the Original A350 or A350XWB; any related project
appraisals by the member States, and any other written communications between any of
the EU member States and EADS/Airbus, related to the developmen t and/or financing of
the Original A350 or A350XWB;
c. All A350 business cases provided by Airbus or EADS to the member States and/or any of
Airbus' risk-sharing suppliers; and
d. Documentation of any loans extended to Airbus/EADS by the Kreditanstalt für
Wiederaufbau ("KfW") for the development and/or financing of the Original A350 or
A350XWB, as well as documentation of any disbursements pursuant to such loans in
2009, 2010, 2011, or 2012.
3. Following letters from the European Union dated 20 July 2012 3, a respons e by the
United States dated 23 July 2012 4, and a further letter from t he European Union dated
24 July 20125, the Panel issued a communication in which it requested the European Union to
respond to the United States' request by 6 August 2012. 6 This date wa s, at the request of the
European Union, subsequently extended by the Panel to 9 August 2012. 7 On 9 August 2012, the
European Union submitted a detailed response to the United States' Article 13 request, in which it
asks the Panel to reject the request "at least until the written procedure is complete." 8 The
United States replied to the European Union's comments on 16 August 2012. 9 In response to a
request by the European Union, also dated 16 August 2012 10, the Panel granted the
European Union until 23 August 2012 to submit a response to the United States' reply, limiting its
response to the fresh assertions and arguments with respect to the United States' request which

1 Letter of the United States to Chairman of the Panel, dated 20 July 2012 (hereafter, "Article 13
request").
2 Article 13 request, p. 2. Moreover, the United States considers that the Panel may be unable to make
an objective assessment of the arguments and assertions raised by the European Union in the absence of these
documents.
3 Letter of the European Union to the Chairman of the Panel, dated 20 July 2012.
4 Letter of the United States to the Chairman of the Panel, dated 23 July 2012.
5 Letter of the European Union to the Chairman of the Panel, dated 24 July 2012.
6 Communication of the Panel to the Parties, dated 24 July 2012.
7 Letter of the European Union to the Chairman of the Panel, dated 27 July 2012; Communication of the
Panel to the Parties, dated 30 July 2012.
8 European Union, Comments on the US Request for a Preliminary Ruling Decision, 9 August 2012
(hereafter "EU Comments, 9 August 2012"), paras. 1 and 112.
9 United States' Reply to the European Union's comments on the US Request for a Preliminary Decision,
16 August 2012 (hereafter, "US Reply, 16 August 2012").
10 Letter of the European Union to the Chairman of the Panel, dated 16 August 2012.

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the European Union asserts that the United States has made in its reply. 11 The European Uni on
submitted this response on 23 August 2012. 12 The Panel has taken into consideration all of the
arguments made by the parties in the foregoing exchanges and advises the parties as follows:
4. Article 13.1 of the DSU provides:
1. Each panel shall have the rig ht to seek information and technical advice from
any individual or body which it seems appropriate. However, before a panel seeks
such information or advice from any individual or body within the jurisdiction of a
Member it shall inform the authorities of that Member. A Member should respond
promptly and fully to any request by a panel for such information as the panel
considers necessary and appropriate. Confidential information which is provided shall
not be revealed without formal authorization from t he individual, body, or authorities
of the Member providing the information.
5. Article 13 of the DSU makes a grant of discretionary authority to panels enabling them to seek
information from any relevant source, as they deem appropriate in a particular case. 13 The
Appellate Body has stated that Article 13.1 imposes no conditions on the exercise of this
discretionary authority.14 Moreover, in Canada – Aircraft, the Appellate Body observed that there is
nothing in either the DSU or the SCM Agreement to support th e assumption that a Member 's duty
to respond promptly and fully to a panel 's request for information arises only after the opposing
party to the dispute has established a prima facie case that its complaint or defence is
meritorious.15 As the Appellate Body stated:
To the contrary, a panel is vested with ample and extensive discretionary authority to
determine when it needs information to resolve a dispute and what information it
needs. A panel may need such information before or after a complaining or a
responding Member has established its complaint or defence on a prima facie basis. A
panel may, in fact, need the information sought in order to evaluate evidence already
before it in the course of determining whether the claiming or the responding Member,
as the case may be, has established a prima facie case or defence.16
6. Finally, in US – Large Civil Aircraft (2 nd complaint), the Appellate Body stated that in
considering whether to exercise its authority under Article 13 of the DSU, particularly where a
party has made an explicit request that it do so, a panel should have regard to considerations such
as what information is needed to complete the record, whose possession it lies within, what other
reasonable means might be used to procure it, why it has no t been produced, whether it is fair to
request the party in possession of the information to submit it, and whether the information or
evidence in question is likely to be necessary to ensure due process and a proper adjudication of
the relevant claim(s).17
7. In its first written submission, t he United States argues that France, Germany, Spain and the
United Kingdom have given €3.5 billion in new LA/MSF for the A350XWB and that this new LA/MSF
is a failure to comply with the recommendations and rulings of the DSB in the original
proceeding.18 The United States further alleges that the new LA/MSF has been granted by the
relevant EU member States on the same core terms and conditions as grants of LA/MSF for
previous Airbus aircraft (i.e. unsecured, success-dependent, levy-based and back -loaded) and on

11 Communication of the Panel to the Parties, dated 17 August 2012.
12 European Union, Comments on the US Response to the EU Comments on the US Request for a
Preliminary Decision, 23 August 2012 (hereafter, "EU Comments, 23 August 2012").
13 Appellate Body Report, Argentina – Textiles and Apparel, para. 84; Appellate Body Report, EC –
14 Appellate Body Report, Canada – Aircraft, para. 185.
15 Appellate Body Report, Canada – Aircraft, para. 192.
16 Appellate Body Report, Canada – Aircraft, para. 192 (original emphasis).
17 Appellate Body Report, US – Large Civil Aircraft (2nd complaint), para. 1140.
18 United States' first written submission, para. 8. The United States argues that LA/MSF for the
A350XWB is a "measure taken to comply" in that it is closely related to the subsidies already found inconsistent
with the SCM Agreement in the original proceeding, it essentially replaces the A330/A340 LA/MSF agreements
that the European Union claims to have terminated, and results in circumvention of the European Union's
compliance obligations; United States' first written submission, paras. 6, 105.

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better-than-commercial terms. 19 In addition, the United States argues that LA/MSF for the
A350XWB is contingent in fact on export performance, contrary to Article 3.1(a) of the SCM
Agreement as well as an import substitution subsidy contrary to Article 3.1(b) of the SCM
Agreement. The United States makes various assertions as to the nature, structure and modalities
of operation of LA/MSF for the A350XWB in support of these arguments.20
8. In its first written submission, the European Union requests the Pane l to find that none of the
four separate A350XWB financing agreements is a "measure taken to comply" within the meaning
of Article 21.5 of the DSU and that they are therefore outside the scope of th is compliance
proceeding.21 The European Union argues that in determining whether there is a "close nexus"
between a challenged (undeclared) measure, the measures at issue in the original proceeding, and
the recommendations and rulings of the DSB in the original proceeding, it must first be established
that the un declared measure can be linked to a "common overarching measure" at issue before
the original panel, and then whether there is a sufficiently close nexus in terms of timing, nature
and effects, between the undeclared measure, the measures at issue in the o riginal proceeding,
and the recommendations and rulings of the DSB. 22 According to the European Union, the
United States has failed to satisfy both of these requirements with regard to the LA/MSF for the
A350XWB. Moreover, the European Union argues that the United States has failed to establish that
the LA/MSF for the A350XWB confers a "benefit" within the meaning of Article 1.1(b) of the SCM
Agreement.23 The European Union also disputes the United States' claims that LA/MSF for the
A350XWB is contingent in f act on export performance contrary to Article 3.1(a) or an import
substitution subsidy contrary to Article 3.1(b) of the SCM Agreement.24
9. Based on the arguments presented by the parties in their first written submissions, we consider
it likely that the Pane l will have to evaluate the nature, timing, and effects of the provision of
LA/MSF by France, Germany, Spain and the United Kingdom in connection with the A350XWB in
order to address the European Union's preliminary ruling request that the Panel find that the
financing agreements for the A350XWB are outside the scope of this proceeding. 25 Moreover,
should the Panel reach the United States' substantive claims with respect to LA/MSF for the
A350XWB, information with respect to the nature, timing and substance of the provision of LA/MSF
in connection with the A350XWB will be essential in determining whether a ny subsidies exist, the
nature, magnitude, and effects of such subsid ies, and whether any such subsidies are in fact
contingent on export performance or import substitution subsidies.26
10. The European Union argues that for the Panel to request the information the subject of the
United States' Article 13 request at this stage in the proceeding would be inconsistent with the
principles regarding burden of proof and the prohibition on a pa nel making a case for a party. The
European Union submits that the Panel will only be in a position to know whether it is necessary to
clarify contradictory facts that may be relevant to addressing the European Union 's preliminar y

19 United States' first written submission, para. 117.
20 United States' first written submission, paras. 189-209, 230-239.
21 European Union's first written submission, para. 57.
22 European Union's first written submission, paras. 57-92.
23 European Union's first written submission, paras. 368-379. The European Union asserts that the
United States has failed to offer any evidence that LA/MSF for the A350XWB has been provided at rates that
are below market, and that its argument that "unsecured, success-dependent, and back-loaded" financing is
not available at market is contradicted by the evidence.
24 European Union's first written submission, paras. 421-430, 471-475.
25 See, United States' first written submission, paras. 139-165; European Union's first written
submission, paras. 57-113. We note the European Union's position that, as the responding party, it has
advanced no "claims" in this dispute. However, in raising jurisdictional objections to the Panel's consideration
of financing for the A350XWB, the European Union has made a number of assertions concerning the nature and
timing of that financing, which the Panel will have to resolve, which requires it to have an adequate evidentiary
basis for its analysis.
26 We note in this context that the underlying documents concerning the grant of LA/MSF for each of the
models of Airbus aircraft at issue in the original proceeding, including inter alia business cases, contracts,
schedules, annexes, and intergovernmental agreements, were essential in the Panel's evaluation of the United
States' subsidy claims in the original dispute. See, e.g., Panel Report, EC and certain member States – Large
Civil Aircraft, paras. 7.367-7.380 and 7.403-7.431 and associated footnotes. Some of this information was
made available in the Annex V process in that dispute, but additional documents were submitted as exhibits by
the European Communities in its submissions and in response to requests made in questions from the Panel.
Panel Report, EC and certain member States – Large Civil Aircraft, footnotes 2436, 2517, 2533.

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ruling request after the parties have submitted their rebuttal submissions. 27 However, given the
nature of the issues concerning the alleged provision of LA/MSF in respect of the A350XWB which
are before the Panel, and the absence from the record of the k ey information that is likely to be of
direct relevance to the Panel's evaluation of those issues, it is already clear to us that we will need
to carefully examine the actual LA/MSF agreements, project appraisals and business cases
pertaining to the A350XW B in order to carry out our obligation under Article 11 of the DSU to
make an objective assessment of the matter before us. 28 We consider the issues to be sufficiently
delineated on the basis of the parties ' first written submissions and that it is efficien t and
appropriate for the Panel to request those documents at this stage of the proceeding. 29 We regard
the due process interests of both parties as being best served by the Panel requesting the
information prior to the parties' respective rebuttal submissi ons, so that both parties have the
opportunity to refer to that information in their rebuttals, at the meeting with the Panel, and in any
written answers to questions that may also be put to them by the Panel.30
11. We are not persuaded by the European Union 's arguments that to request the information at
this point in the proceeding would result in unfairness to the European Union. 31 The European
Union characterize s the United States ' request that the Panel exercise its authority to request
information pursuant t o Article 13 of the DSU as an untimely request for a preliminary ruling, or
preliminary "decision". However, as we have previously indicated, we do not share this
understanding of the United States' request. 32 Requests for preliminary rulings ask a panel to
resolve certain matters in dispute between the parties definitively prior to addressing other
matters in dispute. By contrast, consideration of a request from a party that the Panel exercise its
authority under Article 13 of the DSU involves a decision by the Panel as to whether the Panel
itself will do something; namely, seek particular information which it deems appropriate and
necessary to its resolution of matters in dispute - including preliminary matters. The United States
has clarified that it does not seek a preliminary ruling on whether the European Unio n has met its
burden of proof. We see no basis for treating the Article 13 request made by the United States as
a request for a preliminary ruling and no basis for the conclusion that the United Sta tes' request is
untimely in light of paragraph 14 of the Working Procedures adopted in this dispute.33
12. The European Union also characterizes the United States' Article 13 request as a unilateral
attempt by the United States to amend the agreed timetable by pre-empting the Panel 's plan to
put questions to the parties at the stage of preparation for the substantive meeting with the
parties.34 We do not agree. Such a characterization incorrectly presumes that a panel's authority

27 EU Comments, 23 August 2012, para. 16.
28 While parties carry the burden of adducing evidence in support of their claims and defences, there are
circumstances in which a party cannot reasonably be expected to meet that burden by adducing all relevant
evidence required to make out its case; notably, when the information is in the exclusive possession of the
opposing or a third party. As the Appellate Body has recognized, in such circumstances, a panel may be unable
to make an objective assessment of the matter without exercising its authority under Article 13 of the DSU to
seek out that information; Appellate Body Report, US – Large Civil Aircraft (2nd complaint), paras. 1139-1140.
29 We note that while panels have delayed making requests under Article 13 when asked to do so at an
early stage of the proceedings, before written submissions have been filed, in this case, the first written
submissions have been filed, and the issues in dispute have been clarified by the parties to the extent that it is
clear to the Panel that it will not be able to address those issues without particular information which is not
currently on the record. Due process and the "prompt settlement of situations" called for in Article 3 of the DSU
do not require a panel to delay seeking information merely because it has been prompted to consider the
question by a party, rather than coming to the issue on its own. In this regard, even assuming that the United
States' request were somehow untimely, we do not consider that this alone would warrant declining to exercise
our authority to seek information pursuant to Article 13.
30 The European Union argues that the Panel should first rule on its request for a preliminary ruling that
LA/MSF is outside the scope of this proceeding, thereby rendering the United States' Article 13 request moot;
EU Comments, 9 August 2012, para. 111. However, in order to discharge our obligation under Article 11 of the
DSU, the Panel will require certain information in order to address the European Union's preliminary ruling
request. It is therefore logical and necessary to request this information prior to evaluating the request for a
preliminary ruling.
31 EU Comments, 9 August 2012, paras. 36 and 43; EU Comments, 23 August 2012, para. 6.
32 Communication of the Panel to the Parties, dated 24 July 2012, page 2.
33 Moreover, even if the United States' request were considered to be untimely, we would not consider it
appropriate to deny it solely for that reason. In our view, and in light of the Appellate Body's decision in US –
Large Civil Aircraft (2nd Complaint), a panel must take a request that it seek information under Article 13 of the
DSU seriously, and consider the substantive question of whether it can make a decision consistently with
Article 11 of the DSU in the absence of the requested information before denying such a request.
34 EU Comments, 9 August 2012, paras. 36-43.

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to seek information pursuant to Article 13 of the DSU is exercised through its ability to put
questions to the parties. The authority vested in panels by Article 13 of the DSU is independent of
the ability of panels to put questions to the parties, which is provided for in paragraph 8 of the
Appendix 3 Working Procedures.35 That the Panel indicated its intention to put questions to the
parties prior to the substantive meeting does not limit whether or when it may seek information
pursuant to Article 13 of the DSU. 36 Conversely, whether or n ot a panel seeks information
pursuant to Article 13 of the DSU does not affect the panel's ability to put questions to the parties
at any time.
13. Accordingly, pursuant to the authority provided us under Article 13 of the DSU we hereby
request the European Union to provide the following documents to the Panel:
a. Agreements between the governments of France, Germany, Spain and the United
Kingdom and EADS/Airbus (including any amendments, schedules, annexes and exhibits
thereto), related to the development and/or financing of the A350XWB;
b. Related project appraisals by the governments of France, Germany, Spain and the
United Kingdom related to the development and/or financing of the A350XWB;
c. Business cases provided by EADS/Airbus to the governments of France, Ge rmany, Spain
and the United Kingdom, or to any of Airbus' risk -sharing suppliers, regarding the
A350XWB;
d. Documentation of any loans extended to EADS/Airbus by the Kreditanstalt für
Wiederaufbau (including any amendments, schedules, annexes and exhibits the reto) for
the development and/or financing of the A350XWB, and of disbursements pursuant to
such loans for 2009, 2010, 2011 and 2012.
14. We consider this information to be necessary to ensure a proper adjudication of the relevant
claims, including the Europea n Union's request for preliminary rulings regarding the scope of this
compliance proceeding. 37 This information is not publicly available and we see no means that

35 Paragraph 8 of the Appendix 3 Working Procedures provides:
The panel may at any time put questions to the parties and ask them for explanations either in
the course of a meeting with the parties or in writing.
This provision is replicated in paragraph 8 of the Working Procedures adopted by the Panel in this
proceeding.
36 We note in this regard that the Panel indicated, in a communication conveying the draft timetable to
the parties, that, "although not specified in the draft timetable, the Panel plans to send questions to the parties
in advance of the meeting with the parties in order to assist the parties in preparing for the meeting." This
statement does not suggest that the Panel was limiting its own authority to put questions to the parties "at any
time" as provided for in the Working Procedures. Still less does it suggest that the Panel had determined to
refrain from seeking information pursuant to its authority under Article 13 of the DSU until such time as it had
put questions to the parties. Moreover, even had the Panel indicated such an intention, it has the authority to
alter the timetable, and may do so of its own volition as circumstances may warrant (including as a result of an
unrelated action or request of a party), or if directly requested to do so by a party. As the Appellate Body in US
– Shrimp stated:
It is also pertinent to note that Article 12.1 of the DSU authorizes panels to depart from, or to
add to, the Working Procedures set forth in Appendix 3 of the DSU, and in effect to develop their
own Working Procedures, after consultation with the parties to the dispute. … The thrust of
Articles 12 and 13, taken together, is that the DSU accords to a panel established by the DSB,
and engaged in a dispute settlement proceeding, ample and extensive authority to undertake
and to control the process by which it informs itself both of the relevant facts of the dispute and
of the legal norms and principles applicable to the facts.
Appellate Body Report, US – Shrimp, paras. 105-106.
37 The Panel's request is narrower in scope than the United States' Article 13 request. We do not regard
our request as being unreasonably broad in scope or unclear. We note that the European Union refers in
several places in its first written submission to the "four A350XWB financing agreements" and also refers to the
MSF loan extended by KfW to Airbus Operations GmbH, implying knowledge of the documents in question. See
for example, European Union's first written submission, paras. 94, 95, 102, 103, 105, 107-109, 111,112
(referring to the four A350 XWB financing agreements) and 367 (referring to the MSF loan extended by KfW to
Airbus Operations GmbH). Moreover, given the background of this proceeding, and the arguments and
conclusions in the original Panel Report, we consider that the meaning of terms such as "EADS/Airbus" and
"Airbus' risk-sharing suppliers" is sufficiently clear to allow the European Union to determine where the
documents in question may be found.

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might be used to procure it other than seeking it in accordance with Article 13 of the DSU. 38 Even
if the information in question is not now physically within the possession of the European Union, it
is in the possession of the relevant EU member States, or private parties in those member States,
whose interests are being represented in this proceeding by the European Union.39
15. In the original proceeding, the Panel had the LA/MSF and other financing agreements, related
project appraisals, and business cases for the Airbus aircraft at issue. In that proceeding, the DSB
initiated an Annex V procedure at the United States' request in which the European Communities
was asked, in the first instance, 352 questions by the United States a nd given six weeks to
respond. Of those questions, 37 related to information concerning LA/MSF, and those questions
covered a ll grants of LA/MSF since 1969 for all models of Airbus aircraft, and associated
documentation. Given that the information which the Panel now seeks is much more limited in
scope, we consider that a period of three weeks is adequate time to allow the Europ ean Union to
submit the information. The European Union is therefore requested to provide the above
information by the close of business on 25 September 2012.40
16. The European Union raises two further issues that we wish to address. The first is the concern
expressed by the European Union as to the United States ' apparent failure to destroy EU HSBI and
BCI documents from the original proceeding as the European Union alleges it was required to do. 41
The European Union requests the Panel to resolve this issue bef ore requesting any further
confidential information from the European Union. The United States argues that there is no basis
to criticize it for retaining BCI and HSBI that it was never instructed to destroy.42
17. Paragraph 57 of the Additional Working Procedu res adopted in the original proceeding
requires the destruction or return of documents containing BCI and HSBI after the Conclusion of
the Panel Process as defined in paragraphs 3(a), (c), or (d), but makes no reference to
paragraph 3(b). Paragraph 3(b) of those Procedures defines the "Conclusion of the Panel Process"
as occurring when a party formally notifies the DSB of its decisio n to appeal pursuant to
Article 16.4 of the DSU, as happened in the original proceeding. We recall that paragraph 58 of the
Additional Working Procedures adopted in the original proceeding provides as follows:
After the Conclusion of the Panel Process as defined in paragraph 3(b), the Panel will
inform the Appellate Body of these procedures and will transmit to the Appellate Bod y
any BCI/HSBI governed by these Procedures. Such transmission shall occur separately
from the rest of the Panel record, to the extent possible.

38 It appears that the United States sought to procure the information in question by asking for it during
consultations. The European Union has not indicated why the information requested during the consultations
was not provided and there is no basis for the Panel to conclude that the failure to produce the information was
justified, or that we are prevented from seeking that information under Article 13 of the DSU. Additionally,
irrespective of whether the United States was entitled to request initiation of an Annex V procedure for this
proceeding (an issue we need not decide), we note that paragraph 9 of Annex V expressly provides that
nothing in the Annex V information-gathering process "shall limit the ability of the panel to seek such additional
information it deems essential to a proper resolution to the dispute, and which was not adequately sought or
developed during that process." See also Appellate Body Report, US – Large Civil Aircraft (2nd complaint),
footnote 1117. We see no basis to require a WTO Member to resort to municipal law processes to procure
information for purposes of WTO dispute settlement, as suggested by the European Union, even assuming such
processes would be available and effective, something which we cannot assess. We emphasize that we seek
the requested information because we consider it appropriate to do so in light of our responsibilities in this
dispute.
39 We make no conclusions as to whether the European Union formally "represents" its member States,
or any commercial stakeholders with interests at stake in this dispute. However, as in the original proceeding,
it is the European Union which is appearing before the Panel and making submissions, not its individual
member States. See, Panel Report, EC and certain member States – Large Civil Aircraft, paras. 7.169-7.177
(Decision on Proper Respondent). We recall that in the original proceeding, the European Communities was
able to produce documents of the nature and type requested in this proceeding, both in the Annex V process
and in response to requests from the Panel.
40 We also note that original language documents in French, Spanish and English were submitted in the
original proceeding without translation in many instances. As regards documents in German, which is not a
working language of the WTO, the Panel is prepared to address specific concerns identified by the European
Union regarding translation of German-language documents by this date.
41 European Union's first written submission, para. 48, EU Comments, 9 August 2012, para. 110; EU
Comments, 23 August 2012, paras. 32-38.
42 US Reply, 16 August 2012, para 25.

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The question of destruction or return of documents containing BCI and HSBI after adoption of
Panel and Appellate Body reports following the conclusion of the appellate process is not explicitly
addressed in the Additional Working Procedures adopted by the Panel in the original dispute.

18. We therefore request the United States to respond to the European Union's alleg ations in
paragraph 48 of its first written submission, with specific reference to the materials cited at
footnotes 40 -43, and the terms of the Additional Working Procedures adopted in the original
dispute. We will then invite the European Union to comment , if it so wishes, on the United States'
response. In each case, the Panel would like the parties to suggest what actions, if any, this Panel
should now take in respect of the BCI/HSBI from the original proceeding, including with respect to
any evidence su bmitted in this compliance proceeding which was BCI/HSBI in the original
proceeding.
19. However, we regard the issue of whether BCI/HSBI material submitted in the original dispute
has been dealt with in conformity with the Additional Working Procedures in tha t proceeding to be
separate from the question whether it is appropriate for this Panel to request information pursuant
to Article 13 of the DSU for purposes of this proceeding. There is no allegation that the
United States has disclosed confidential inform ation to persons not authorized to view it, which
might implicate the confidentiality of any new information submitted at this stage. 43 We consider
allegations of non -compliance with the procedures put in place to protect the confidentiality of
certain information in the original dispute to be extremely serious. However, we do not consider it
necessary to resolve whether the United States failed to destroy confidential information in the
record of the original dispute in violation of an obligation to do so b efore seeking information from
the European Union information which we consider necessary for us to discharge our obligations in
this proceeding.
20. The second issue raised by the European Union is its request that, should the Panel request
the European Union to provide information pursuant to Article 13 of the DSU at this stage of the
proceeding, it equally and within the same timeframe, should request the United States to produce
certain information concerning the financing, and/or development of the Boein g 787 and other
Boeing large civil aircraft, including business cases relating to those aircraft. 44 The European Union
submits that such documents are critical for the Panel to conduct a thorough review of the claims
made by the United States, which involve unsupported assertions regarding the Boeing 787 and
other Boeing aircraft and the circumstances in which they were financed, dev eloped, produced and
marketed. The United States asserts that there is no substantive need for the information in
question, ass erting that it raises no claims regarding financing t o Boeing, and that the
European Union's arguments regarding findings of subsidization in US – Large Civil Aircraft
(2nd Complaint) do not require additional evidence for the Panel to evaluate them.45
21. We u nderstand that the information requested by the European Union relates to alleged
subsidization of Boeing LCA, and is sought in connection with the European Union's arguments
concerning "non-subsidized like product" in Article 6.4 of the SCM Agreement. Unlike the situation
before us with respect to the United States ' allegations concerning the financing of the A350XWB,
and the European Union 's response to those arguments, the United States has not yet had an
opportunity to respond to the European Union's ar guments concerning the alleged subsidization of
Boeing LCA. Presumably it will do so in its rebuttal submission, at which point it would have the
opportunity to submit relevant documents. In addition, we recall that in the original dispute, the
Panel concl uded that Article 6.4 is not the exclusive means for demonstrating displacement or
impedance of exports for purposes of a finding of serious prejudice under Articles 6.3(b) of the
SCM Agreement. The United States did not rely on Article 6.4, and the Panel therefore did not
address the question whether there was a "non -subsidized like product" and made no
determinations in that regard. Thus, the Panel rejected the arguments of the European
Communities that subsidization of Boeing LCA precluded a finding of s erious prejudice in the form
of displacement or impedance of exports. 46 That decision by the Panel was not appealed, and was
therefore adopted by the DSB. While acknowledging the lack of Appellate Body review in its first

43 Notwithstanding its assertion concerning the United States' alleged failure to comply with the
Additional Working Procedures adopted in the original proceeding, the European Union submitted BCI and HSBI
in connection with its first written submission in this proceeding.
44 EU Comments, 9 August 2012, paras. 116-117.
45 US Reply, 16 August 2012, para. 30.
46 Panel Report, EC and certain member States – Large Civil Aircraft, paras. 7.1764-7.1771, 7.1798-
7.1800.

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written submission47, the European U nion argues that in light of the decision in US – Large Civil
Aircraft (2 nd Complaint), a multilateral determination that the "like products" to which the
United States refers in this case are subsidized, the situation has changed and that the Panel
should therefore consider this matter.48
22. However, it is not yet clear to us that the Panel will have to make a substantive determination
as to whether the 787, or any other Boeing LCA, benefits from subsidies and we consider that it is
premature to request info rmation relevant to an issue which it is not apparent the Panel will have
to address. 49 In these circumstances, because we cannot at this juncture conclude that the
requested information is likely to be necessary to ensure due process and a proper adjudicat ion of
the relevant claim, we decline to seek the information requested by the European Union at this
stage of the proceeding.50

47 European Union's first written submission, para. 656,
48 European Union's first written submission, para. 658.
49 Assuming the Panel were to accept the European Union's argument and consider this matter, it would
seem that the determination in US – Large Civil Aircraft (2nd Complaint) would be binding on the question of
subsidization of at least some models of Boeing LCA. In this regard, we note that the European Communities
made similar arguments concerning subsidization of Boeing LCA having been determined on a multilateral basis
in WTO dispute settlement, referring to "tens of millions of dollars" received by Boeing pursuant to prohibited
export subsidies applied to LCA. Panel Report, EC and certain member States – Large Civil Aircraft,
footnote 5262. On the other hand, assuming the Panel were to conclude that the United States is once again
not proceeding under Article 6.4 of the SCM Agreement, the question of a "non-subsidized like product" would
not be a matter necessitating resolution, as it was not in the original dispute.
50 We also note the breadth of the European Union's request, which covers all Boeing large civil aircraft,
and is unlimited in time.

- E-10 -

ANNEX E-2
THE EUROPEAN UNION'S ARTICLE 13 REQUEST OF 23 NOVEMBER 2012
(Panel ruling issued on 14 December 2012)
1 Introduction
1. By letter dated 23 November 2012, the European Union requested the Panel to exercise its
authority under Article 13 of the Understanding on Rules and Procedures governing the Settlement
of Disputes ("DSU") to seek information from the United States. 1 The United States responded to
the European Union's request on 29 November 2011. 2 The European Union submitted its reply to
the United States response on 6 December 2012.3
2. The Panel has carefully considered all the arguments made by the parties in the f oregoing
exchanges as well as all relevant claims and arguments made in the United States' first and
second written submissions and the European Union's first written submission. The Panel has
concluded that the requested information is not necessary for i ts evaluation of the United States'
allegations of lost sales and displacement. The Panel therefore denies the European Union's
Article 13 request and declines to seek the information requested by the European Union at this
stage of the proceeding.
2 Article 13 of the DSU
3. Article 13.1 of the DSU provides:
"Each panel shall have the right to seek information and technical advice from any
individual or body which it seems appropriate. However, before a panel seeks such
information or advice from any individu al or body within the jurisdiction of a Member
it shall inform the authorities of that Member. A Member should respond promptly and
fully to any request by a panel for such information as the panel considers necessary
and appropriate. Confidential informat ion which is provided shall not be revealed
without formal authorization from the individual, body, or authorities of the Member
providing the information."
4. Article 13.1 makes a grant of discretionary authority to panels enabling them to seek
information f rom any relevant source, as they deem appropriate in a particular case. 4 The
Appellate Body has stated that Article 13.1 imposes no conditions on the exercise of this
discretionary authority.5 Moreover, in Canada – Aircraft, the Appellate Body observed tha t there is
nothing in either the DSU or the SCM Agreement to support the assumption that a Member 's duty
to respond promptly and fully to a panel 's request for information arises only after the opposing
party to the dispute has established a prima facie case that its complaint or defence is
meritorious.6 As the Appellate Body stated:

1 Letter of the European Union to Chairman of the Panel, dated 23 November 2012 (hereafter, "EU
Article 13 request").
2 Letter of the United States to the Chairman of the Panel, dated 29 November 2012 (hereafter "US
response". The Panel had previously given the United States until 4 December 2012 to respond, and allowed
for a reply from the European Union no later than 11 December. Communication from the Panel to the Parties,
dated 28 November 2012. In light of the early response from the United States, and having been requested by
the United States to do so, the Panel amended the deadline for the European Union to reply to
6 December 2012. Communication from the Panel to the Parties, dated 30 November 2012.
3 European Union, Comments on the US Comments on EU request for Article 13.1 Questions and EU
Request to fix the new time-limit for the filing of the EU Second Written Submission at 31 January 2013,
6 December 2012 (hereafter, "EU Comments, 6 December 2012").
4 Appellate Body Report, Argentina – Textiles and Apparel, para. 84; Appellate Body Report, EC –
5 Appellate Body Report, Canada – Aircraft, para. 185.
6 Appellate Body Report, Canada – Aircraft, para. 192.

- E-11 -

"To the contrary, a panel is vested with ample and extensive discretionary authority to
determine when it needs information to resolve a dispute and what information it
needs. A panel may need such information before or after a complaining or a
responding Member has established its complaint or defence on a prima facie basis. A
panel may, in fact, need the information sought in order to evaluate evidence already
before it in the course of determining whether the claiming or the responding Member,
as the case may be, has established a prima facie case or defence."7
5. In US – Large Civil Aircraft (2 nd complaint), the Appellate Body stated that in considering
whether to exercise its authority under Article 13 of the DSU, particularly where a party has made
an explicit request that it do so, a panel should have regard to considerations such as what
information is needed to complete the record, whose possession it lies within, what oth er
reasonable means might be used to procure it, why it has not been produced, whether it is fair to
request the party in possession of the information to submit it, and whether the information or
evidence in question is likely to be necessary to ensure du e process and a proper adjudication of
the relevant claim(s).8
3 Parties' Arguments with respect to the information request
6. The European Union has requested that the Panel seek information which, it asserts generally,
is necessary for the Panel to evalua te the United States' claims of lost sales and displacement.
Specifically, according to the European Union,
a. the requested information on the pace of development and anticipated entry into service
dates for Boeing 787 aircraft is necessary for the Panel 's objective assessment of the US
lost sales and displacement claims, as it will help the Panel assess whether there exist
any disincentives for airlines seeking near -term delivery of an aircraft to purchase 787
aircraft, and to take those considerations into account when assessing the US lost sales
and displacement claims;
b. the requested information on entry into service for 737MAX aircraft is necessary to
enable the Panel, in assessing US lost sales and displacement claims, to take into
account uncertainty su rrounding first delivery positions for Boeing 's 737 MAX
programme, and whether that uncertainty functions as a disincentive for airlines to
purchase these aircraft;
c. the requested information on possible 787 delivery dates is necessary for the Panel to
take into account Boeing's ability to deliver 787 aircraft and the pace of those deliveries,
which will help the Panel assess whether there exist any disincentives for airlines seeking
near-term delivery of an aircraft to purchase 787 aircraft, and to take tho se
considerations into account when assessing the US lost sales and displacement claims;
d. the requested information on possible 737MAX delivery dates is necessary for the Panel
to take into account Boeing 's alleged inability to deliver 737 MAX aircraft, and the pace
of those deliveries, which will help the Panel assess whether there exist any disincentives
for airlines seeking delivery of an aircraft to purchase 737 MAX aircraft and to take those
considerations into account when assessing the US lost sales and displacement claims;
e. the requested documentation of Boeing's final offers to AirAsiaX, AirAsia, Asiana, and
Cebu Pacific Air is necessary for the Panel 's objective assessment of the US lost sale
claims to these carriers involving A320neo aircraft and A3 50XWB aircraft, which would
appear to turn in substantial part on the availability of delivery positions and other terms
of Boeing's final offer;
f. the requested documentation of Boeing's final offer to Malaysia Airlines is necessary for
the Panel's objective assessment of the US lost sale claim for Malaysia Airlines involving
the A330-200F, which would appear to turn in substantial part on the quality of the 767
Freighter aircraft and other terms of Boeing's final offer;

7 Appellate Body Report, Canada – Aircraft, para. 192 (original emphasis).
8 Appellate Body Report, US – Large Civil Aircraft (2nd complaint), para. 1140.

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g. the requested documentation of Boeing's final offer to Cathay Pacific is necessary for the
Panel's objective assessment of the US lost sale claim involving A350XWB aircraft, which
would appear to turn in substantial part on Boeing 's ability to actually offer for sale the
aircraft allegedly offered, and the terms of Boeing's offer;
h. the requested extracts from the Boeing purchase agreement with Ethiopian Airlines for
the 787 is necessary for the Panel 's objective assessment of the US lost sale claim for
Ethiopian Airlines, which would appear to turn in substantial part on the 787 model(s) it
initially ordered in 2005;
i. the requested Boeing presentations provided to potential customers outlining Boeing 's
views concerning the strengths, weaknesses, critical issues and strategic issues for its
proposed aircraft for a number of its lost sales claims are necessary because the United
States has provided such documentation for some but not all of its lost sales claims. The
information for each of the orders alleged to be lost sales is necessary to ena ble the
Panel to undertake an objective assessment of the US claims, which will require it to
assess why the United States has chosen to withhold this document for certain sales
covered by its lost sales claims, including to assess whether the documents re veal non-
attribution factors;
j. the requested information regarding Boeing's 2012 standard marketing presentations for
each of its 767, 777 and 747 -8 is necessary for the Panel to objectively assess the
alleged competition between Airbus and Boeing freighter aircraft; and
k. the requested presentations made to Boeing 's Board of Directors during 2011 and 2012
addressing the possibility of the launch of a stretched version of the 787 and an
improved version of the 777 are necessary to enable the Panel to objective ly assess the
US lost sales claims in light of US allegations, in the context of a number of its lost sales
claims, that Boeing offered a stretched version of the 787 or an improved version of the
777, without proffering other information that would help t he Panel assess whether
Boeing had decided for reasons other than the alleged subsidies to defer the launch of
these aircraft.9
7. The United States does not consider the information to be relevant to its arguments relating to
lost sales and displacement in the second written submission, and asserts that the European Union
does not need the information to argue that the United States has failed to make a prima facie
case with respect to its claims. 10 Moreover, the United States contends that it is inappropriat e to
use Article 13 to provide information to enable the European Union to make its own case. In
addition, the United States considers that it is late in the proceedings for this request, given that
the United States' claims of lost sales and displacement were set out in its first written submission,
filed in May, and asserts that the request is an effort to delay these proceedings.
4 Information requested with respect to the United States' allegations of lost sales
8. The Appellate Body has stated, with resp ect to what constitutes a "lost" sale within the
meaning of Article 6.3(c) of the SCM Agreement:
"We consider that a sale that is "lost" is one that a supplier "failed to obtain". We
further understand lost sales to be a relational concept that includes co nsideration of
the behaviour of both the subsidized firm(s), which must have won the sales, and the
competing firm(s), which allegedly lost the sales."11

9 EU Article 13 request, Appendix.
10 The United States did not respond individually to the European Union's questions and justifications,
but did indicate that it would provide detailed comments should the Panel request it to do so, asking that any
such process not result in any further delay to this proceeding. US Response, page 4.
11 Appellate Body Report, EC and certain member States – Large Civil Aircraft, para. 1214, quoting New
Shorter Oxford English Dictionary, p. 1632. See also, Appellate Body Report, US – Large Civil Aircraft (2nd
complaint), para. 1052.

- E-13 -

"{A} lost sales claim may be supported with evidence of lost sales taking place
throughout a geographi cal and product market, or with evidence of particular sales
campaigns occurring within that market. "12
Lost sales are "significant" under Article 6.3(c) if they are "important, notable or consequential."13

9. In terms of possible approaches for analyzing a claim of significant lost sales, the Appellate
Body observed that:
"While a two-step approach to the assessment of lost sales is permissible, in our view,
the most appropriate approach to assess whether lost sales are the effect of the
challenged subsidy is through a unitary counterfactual analysis. This would involve a
comparison of the sales actually made by the competing firm(s) of the complaining
Member with a counterfactual scenario in which the firm(s) of the respondent Member
would not have received the challenged subsidies. There would be lost sales where the
counterfactual analysis shows that, in the absence of the challenged subsidy, sales
won by the subsidized firm(s) of the respondent Member would have been made
instead by the competing firm(s) of the complaining Member."14
10. In EC and certain member States – Large Civil Aircraft, the Appellate Body considered how
the concept of a "lost" sale applies under the conditions of competition in the LCA industry when it
rejected the European Union's chal lenge to the original Panel's finding that Boeing lost the A380
launch order placed by Emirates Airlines:
"Given the conditions of competition in the LCA industry, it was not necessary for
Boeing to have made a formal offer to Emirates Airlines – or "turn up" to use the
European Union's expression – for the sales to qualify as sales that Boeing "failed to
obtain." As the Panel explained, even in the absence of a formal offer from Boeing,
Emirates could be expected to have considered the products manufactur ed by Boeing
before making its purchase decision."15
11. In the context of an analysis of the alleged lost sales in accordance with the above elements,
we fail to see the relevance of the information sought by the European Union to the question
whether the effect of alleged subsidies to Airbus LCA was lost sales of competing Boeing LCA. The
European Union does not dispute that Boeing "failed to obtain" the sales in question, or that Airbus
was successful in winning the relevant sales. Nor does the European Union dispute the significance
of the sales allegedly lost, in the sense of their importance to Boeing. Arguably, t he
European Union appears to be seeking the information in order to make the point that in each of
the specific alleged lost sales at issue, poten tial entry into service or delivery dates, or details
concerning the features and qualities of the particular Boeing LCA being offered, or the specific
possibilities with respect to potential to -be-developed Boeing LCA offered, might have constituted
a dis incentive to ordering from Boeing. However, even assuming that this information might
demonstrate weaknesses in the Boeing offer in a particular sales campaign, it is difficult, in the
light of the interpretation of "lost sales" and the analytical framewor k outlined above, to see how
this might undermine the conclusion that the sales at issue were lost by Boeing.16
12. The question for the Panel then is whether the United States can establish that any of the
allegedly lost sales were caused by the alleged subs idies. In particular, the question before the
Panel is whether, in the absence of the alleged subsidies, the sales made by Airbus would have
been made by Boeing. Our understanding is that the basic premise of the United States' claims of
lost sales caused by subsidies is that, as the Appellate Body concluded with respect to the lost
sales found in the original dispute, absent the subsidies, Airbus would not have been able to offer

12 Appellate Body Report, US – Large Civil Aircraft (2nd complaint), para. 1230.
13 Appellate Body Report, US – Large Civil Aircraft (2nd complaint), para. 1052.
14 Appellate Body Report, EC and certain member States – Large Civil Aircraft, para. 1220.
15 Appellate Body Report, EC and certain member States – Large Civil Aircraft, para. 1223.
16 The European Union does argue that Boeing and Airbus LCA do not compete in the three product
markets identified by the United States, and thus that in some of the alleged lost sales, the LCA offered by
Boeing were not competitive, and thus that the sale cannot be considered to have been lost. However, this line
of argument does not rest on an evaluation of the specifics of any given sales campaign, but on an evaluation
of the relevant products and competition. Moreover, we note that the European Union has not argued that, or
how, the requested information is relevant to such an analysis.

- E-14 -

the LCA it did offer in these sales campaigns, and thus, as the only other competitor in the market,
Boeing17 would have made those sales. 18 Since this counterfactual analysis rests on the effect of
subsidies on the introduction of Airbus LCA to the market, we fail to see the relevance of the
requested information to the analysis of lost sales in line with the considerations set out by the
Appellate Body. Even assuming for purposes of this discussion that the information requested
might relate to "non -attribution" factors, we fail to see how this would affect the consideration of
an argument that, in the absence of subsidies, Airbus would not have been able to offer the LCA
that were ultimately purchased by the customers involved in the alleged lost sales, and thus the
US LCA industry would not have lost those sales. Finally, we fail to see the relevance to our task of
evaluating the United States' lost sales claims of information concerning Boeing's own views
concerning the strengths, weaknesses, critical issues and strategic issues for proposed aircraft,
2012 standard Boeing marketing presentations, and presentations to Boeing's Board of Directors in
2011 and 2012 concerning the possible launch of variant aircraft to an evaluation of lost sales in
line with the considerations set out by the Appellate Body. We therefore conclude that th e
information sought by the European Union is not necessary to the Panel's proper evaluation of the
United States' allegations of lost sales.
5 Information requested with respect to the United States' allegations of displacement
13. With respect to the "displ acement" of imports or exports of the like product, the Appellate
Body stated in EC and certain member States – Large Civil Aircraft that:
"{W}e understand the term displacement to connote that there is a substitution effect
between the subsidized product and the like product of the complaining Member. This
means that displacement arises under subparagraph (a) of Article 6.3 where the effect
of the subsidy is that imports of a like product of the complaining Member are
substituted by the subsidized product in the market of the subsidizing Member.
Similarly, under subparagraph (b), displacement arises where exports of the like
product of the complaining Member are substituted in a third country market by
exports of the subsidized product."19
14. The Appellate Body explained that "where a complainant puts forward a case based on the
existence of displacement as a directly observable phenomenon and the panel opts to examine it
under a two -step approach, as was done in this dispute, displacement arises under Article 6 .3(a)
of the SCM Agreement where imports of a like product of the complaining Member are declining in
the market of the subsidizing Member, and are being substituted by the subsidized product." 20 The
same standard would apply for Article 6.3(b) according to the Appellate Body: "displacement
arises where exports of the like product of the complaining Member are declining in the third
country market concerned, and are being substituted by exports of the subsidized product." 21 The
Appellate Body also noted, rega rding the elements of displacement, that displacement must be
"discernible," the identification of displacement "should focus on trends in the markets, looking at
both volumes and market shares," and the trend has to be "clearly identifiable and an assessm ent
based on a static comparison of the situation of the subsidized product and the like product at the
beginning and at the end of the reference period would be inadequate."22
15. In the context of an analysis of displacement based on the foregoing elements, we fail to see
the relevance of information concerning anticipated dates of entry into service of Boeing LCA or
delivery positions to the question whether the effect of subsidies to Airbus LCA was displacement
of competing Boeing LCA in certain geographic markets. A finding of displacement would be based
on an evaluation of trends in the specified geographic markets based on the number of aircraft
actually delivered during a relevant reference period. Similarly, since an evaluation of

17 Or, in the event of a US LCA industry comprising Boeing and competitor(s) (one of the other
counterfactual scenarios posited by the Panel in the original dispute), by the US LCA industry.
18 The European Union refers, in the context of alleged lost sales in the single-aisle market, to the
potential market entry of other aircraft manufacturers (specifically, Bombardier). However, there is no
allegation or evidence that any other aircraft manufacturer was involved in any of the sales campaigns at issue
in the United States' lost sales allegations, much less any argument or evidence to suggest that any such
manufacturer would have obtained any sales not made by Airbus, rather than Boeing.
19 Appellate Body Report, EC and certain member States – Large Civil Aircraft, para. 1160.
20 Appellate Body Report, EC and certain member States – Large Civil Aircraft, para. 1170.
21 Appellate Body Report, EC and certain member States – Large Civil Aircraft, para. 1170.
22 Appellate Body Report, EC and certain member States – Large Civil Aircraft, paras. 1170-71.

- E-15 -

displacement is based on aggregated data for competing products in a particular geographical
market, we fail to see the relevance of specific aspects of the competition between LCA
manufacturers in any given sales campaign to the determination. Again, we understand the
United States' argument to be essentially that, in the absence of the subsidies, Airbus would not
have had the LCA it was able to deliver, and thus Airbus LCA would not have displaced exports or
imports of Boeing (or US LCA industry) aircraft. We fail to see how c onsideration of the requested
information concerning delivery positions and entry into service dates would affect our evaluation
of the United States' claims of displacement in line with the considerations set out by the Appellate
Body. We therefore conclu de that the information sought by the European Union is not necessary
to the Panel's proper evaluation of the United States' allegations of displacement.
6 Other issues
16. The European Union's arguments indicate that, in its view, the United States should h ave put
the requested information on the record with its second written submission, having failed to do so
with its first written submission. The United States clearly considers the information not relevant to
support its claims and arguments, and that the refore there was no reason to submit it. We see no
basis for a conclusion that the United States should have somehow predicted that t he
European Union might wish to raise arguments it had not made in its first written submission, and
should have submitted, of its own volition, evidence that might support such arguments with its
second written submission.
17. The United States argues that, to the extent the European Union argues that the
United States has failed to make a prima facie case, additional informatio n is not necessary to
enable the European Union to respond to the United States' claims. The United States points out
that, with the exception of one question which refers to an alleged lo st sale discussed in the
United States' second written submission, a ll of the information requested by the European Union
relates to lost sales and displacement claims and arguments set out in the United States' first
written submission, and that the European Union responded to those claims and arguments in its
first written submission with no indication that it was lacking necessary information to do so. The
European Union justifies the timing of its request on the basis that the need for the information
requested only became apparent during the process of reviewing the US second written
submission, filed on 19 October 2012. The European Union implies that this process prevented it
from realizing earlier the lack of necessary information on the record, and notes that it is still in
the process of reviewing the United States ' second written submission. 23 The European Union
contends that the information is needed to ensure it has an adequate opportunity to prepare its
own second written submission.
18. We consider it noteworthy that the European Union responded fully to the United States' first
written submission, in which the facts and arguments supporting the United States' lost sales and
displacement claims were set out, and for which supporting evidence was submitted, without any
indication that additional evidence might be nec essary for it to rebut the United States' claims.
Indeed, the European Union's first line of argument is that the United States failed to make a
prima facie case of, inter alia, lost sales and displacement, an argument which does not require
additional evidentiary support. There is very little further elaboration with respect to those claims
in the United States' second written submission, and certainly nothing that would prompt a need
for additional information, as requested by the European Union, that did not previously exist. In
our view, the requested information is at most relevant to possible European Union's arguments
seeking to demonstrate that the alleged lost sales and displacement were not caused by subsidies,
but by other factors.24 We do not consider that the European Union was entitled to wait until after
the United States filed it second written submission, which did not elaborate on the claims,
arguments, and evidence concerning lost sales and displacement, to request a broad array of
information of little relevance to our evaluation of the claims and arguments put forward by the

23 The European Union asserts that the US second written submission is "a very substantial document"
and includes numerous exhibits, some of which are "lengthy and substantial", as well as alleging that the
submission filed on 19 October "transpired to be the preliminary version" of the US second written submission,
requiring "detailed and sustained" exchanges of views, further versions, and the submission of revised exhibits,
over a three week period. The United States, in opposing the European Union's separate request for an
extension of time to file its second written submission, contends the complexity of issues, the length of the
submission, and the submission of export reports as exhibits are not "unexpected development[s]."
24 We recall that the European Union did not, for the most part, address the circumstances of the
individual alleged lost sales in its first written submission, choosing to make its arguments more generally.

- E-16 -

United States. Whether or not to grant an Article 13 request for information is governed by a
panel's need for the information to evaluate the claims and arguments of t he parties consistently
with its obligations under Article 11 of the DSU, and as discussed above, we do not consider that
such a need is the case here. In our view, at this stage of the proceeding, where the
European Union, the party seeking information, h as already had a full opportunity to respond to
the claims and arguments of the United States, and the information requested relates almost
exclusively to matters fully addressed in the first written submission of the United States, it would
not be fair or appropriate for us to request information that might enable the European Union to
make arguments in its rebuttal which it never sought to make in its first written submission, and
which have no basis in the United States' second written submission to whic h it is now preparing a
response.25
7 Conclusion
19. In light of the foregoing, it is clear to the Panel that the requested information is not likely to
be necessary to ensure due process and a proper adjudication of the relevant claims. We therefore
deny the European Union's request and decline to seek the inform ation requested by the
European Union at this stage of the proceeding.

- F-1 -

ANNEX F
MAIN PROCEDURAL RULINGS OF THE PANEL
Contents Page
Annex F-1 The European Union's request concer ning the question whether the
United States was required to return or destroy materials containing BCI and
HSBI from the original proceeding (Panel ruling issued on 24 October 2012)
F-2
Annex F-2 The European Union's requests of 28 May 2013 concerning: (i ) the
United States' Full HSBI Version Appendix and HSBI Exhibits submitted in
conjunction with its answers to the Panel's first set of questions; and (ii) the
United States' alleged violations of the BCI/HSBI Procedures (Panel ruling
issued on 5 June 2013)
F-4
Annex F-3 The European Union's requests of 28 May 2013 concerning: (i) the
United States' alleged failure to make a prima facie case and the "back-loading"
of arguments and evidence; and (ii) the United States' alleged unauthorized
access to European Union BCI/HSBI (Panel ruling issued on 12 June 2013)
F-11
Annex F-4 The European Union's request of 14 June 2012 to exclude certain untimely
United States' exhibits (Panel ruling issued on 28 June 2013)
F-20
Annex F-5 The European Union's requests of 2 8 June 2013 concerning the United States'
"critique" to the CompetitionRX Report presented in the United States'
comments to the European Union's answers to the Panel's first set of questions
(Panel ruling issued on 8 July 2013)
F-23
Annex F-6 The European Union's requests of 2, 4 and 11 September 2013 concerning the
adoption of additional information confidentiality procedures for the purpose of
responding to Panel question 126 (Panel ruling issued on 16 September 2013)
F-29
Annex F-7 The European Union's request of 24 March 2014 concerning the Panel's decision
to pose six additional written questions to the parties (Panel ruling issued on
31 March 2014)
F-31

- F-2 -

ANNEX F-1
THE EUROPEAN UNION'S REQUEST CONCERNING THE QUESTION WHETHER
THE UNITED STATES WAS REQUIRED TO RETURN OR DESTROY MATERIALS
CONTAINING BCI AND HSBI FROM THE ORIGINAL PROCEEDING

(Panel ruling issued on 24 October 2012)
1. The Panel is in receipt of the response of the United States to EU allegations regarding the
handling of BCI/HSBI information, dated 5 October 20121, submitted in response to a request from
the Panel in its communication of 4 September 2012.2 The Panel is also in receipt of the comments
of the European Union on the US Response, dated 16 October 2012 3, which were submitted in
response to a communication from the Panel dated 11 October 2012.4
2. At issue between the parties is whether BCI/HSBI submitted in the original proceeding should
have been returned or destroyed such that the United States may not refer to it for purposes of
this compliance proceeding. We recall that BCI/HSBI was submitted in the original proceeding
pursuant to the BCI/HSBI Procedures adopted by the panel in that proceeding. 5 The interpretive
question before the Panel is whether the Original BCI/HSBI Procedure s required the parties to
destroy or return BCI/HSBI submitted in the original proceeding.
3. The United States considers that they do not, based on the text of paragraphs 57, 58 and the
defined term "Conclusion of the Panel Process" in paragraph 3 of those procedures. Thus,
according to the United States, it has not acted inconsistently with the Original BCI/HSBI
Procedures in referring to such information in its first written submission in this compliance
proceeding. Indeed, the United States considers that it is free to refer to BCI/HSBI submitted in
the original proceeding in its other submissions to the Panel in this proceeding. The United States
considers that this interpretation makes sense, because BCI/HSBI that was before the panel in the
original proceeding will clearly be relevant to the compliance Panel's assessment of whether there
has in fact been compliance with the recommendations and rulings of the DSB in the original
proceeding.
4. The European Union considers that the United States' interpretati on of the Original BCI/HSBI
Procedures would mean that, because the original Panel Report was appealed, there was and is no
obligation on the parties to return or destroy BCI/HSBI submitted during the original proceeding.
Such an interpretation is unreason able and contrary to the whole rationale of the procedures for
protection of confidential information. The European Union requests the Panel to adopt a different
interpretation of the Original BCI/HSBI Procedures, which would require the United States to h ave
returned or destroyed BCI/HSBI submitted during the original proceeding within a reasonable
period following adoption of the original Panel Report, as modified by the Appellate Body Report.
The consequence of such an interpretation is that the United S tates is not authorized to refer to
BCI/HSBI submitted during the original proceeding in this compliance proceeding (a circumstance
that the European Union is exceptionally prepared to overlook with respect to the United States'
first written submission on ly). Had the United States wanted to refer to such information in the
compliance proceeding, it should have requested it from the European Union through an Annex V
procedure.
5. The Original BCI/HSBI Procedures are drafted in such a way that the obligation t o destroy or
return BCI/HSBI documents applies depending on the way in which the panel proceeding is
concluded. Where the "Conclusion of the Panel Process", as defined in paragraph 3, is through an

1 United States' Response to EU allegations regarding the handling of BCI/HSBI information, dated
5 October 2012 (hereafter "US Response").
2 Communication of the Panel to the Parties, 4 September 2012, para. 18.
3 European Union's letter to the Chairman of the Panel, dated 16 October 2012 (hereafter "EU
Comments").
4 Communication of the Panel to the Parties, 11 October 2012.
5 Additional Working Procedures for DS316 - Procedures for the Protection of Business Confidential
Information and Highly Sensitive Business Information, 9 November 2007 (hereafter, "Original BCI/HSBI
Procedures").

- F-3 -

appeal to the Appellate Body, paragraph 58 applies. The pl ain language of paragraph 58 does not
contain any obligation to destroy or return BCI/HSBI, but merely refers to the transmission to the
Appellate Body of BCI/HSBI separately from the rest of the record. It is only where the panel
process concludes in the manner envisaged in subparagraphs (a), (c) or (d) that there is an
express obligation, as clearly set out in paragraph 57, to destroy or return BCI/HSBI.
6. The European Union argues that following the appeal, the Panel Report was adopted, as
modified by th e Appellate Body Report, and thus that there was a "Conclusion of the Panel
Process" as described in subparagraph 3(a) at that point, and a consequent obligation to return or
destroy under paragraph 57. However, paragraph 3 defines the "Conclusion of the P anel Process"
as the earliest to occur of the situations described in subparagraphs (a) through (d). Our reading
of the Original BCI/HSBI Procedures is that, when the Panel Report was adopted as modified by
the Appellate Body Report, subparagraph (a) was n ot applicable as this was not the earliest to
occur of the events in (a) through (d). Plainly, the situation in subparagraph (b), namely, notifying
the DSB of an appeal pursuant to Article 16.4 of the DSU, had already occurred. We are unable to
agree with the interpretation of paragraphs 3 and 57 of the Original BCI/HSBI Procedures
proposed by the European Union because it requires overlooking the reference to "earliest to
occur" in paragraph 3.
7. In sum, the Original BCI/HSBI Procedures do not, in our unders tanding, impose an obligation
on the parties to destroy or return BCI/HSBI in the situation in which the Panel Report was
appealed. We note that this gap is addressed in the BCI/HSBI Procedures adopted by the Panel in
this compliance proceeding (the New BCI/HSBI Procedures).6
8. Based on the foregoing, we conclude the United States did not breach the Original BCI/HSBI
Procedures in referring in its submissions in this compliance proceeding to BCI/HSBI submitted
during the original proceeding. No further acti on is required on our part in this regard, and both
parties are free to refer to BCI/HSBI submitted during the original proceeding in the context of this
proceeding, provided, of course, that the New BCI/HSBI Procedures are respected.7
9. The United States ha s further requested that the Panel consider revising the New BCI/HSBI
Procedures to require the parties to destroy or return BCI/HSBI submitted during the compliance
proceeding only at the conclusion of subsequent proceedings (including under Article 22.6 of the
DSU) in this dispute. In our view, paragraphs 63 and 65 of the New BCI/HSBI Procedures make
clear that, following adoption by the DSB of an Appellate Body Report in this compliance
proceeding, there is an obligation to destroy or return all document s within a period to be fixed by
the Panel. Indeed, we consider that paragraph 65 of the New BCI/HSBI Procedures was revised
specifically in order to establish such an obligation in view of the lack of such obligation in the
Original BCI/HSBI Procedures in the situation in which the report of the compliance Panel is
appealed
10. Consequently, we do not consider it necessary or appropriate to make the requested revision
to the New BCI/HSBI Procedures at this time. We would encourage the parties to discuss this issue
with a view to arriving at a mutually acceptable arrangement for the use of BCI/HSBI in any
subsequent proceedings that arise from this dispute.

6 Additional Working Procedures for the Protection of Business Confidential Information and Highly
Sensitive Business Information, dated 12 July 2012 (hereafter "New BCI/HSBI Procedures"). Paragraph 65 of
the New BCI/HSBI Procedures (which is the equivalent provision to paragraph 58 of the Original BCI/HSBI
Procedures) expressly provides that following adoption by the DBS of the Appellate Body report pursuant to
Article 17.4 of the DSU, or a decision by the DSB by consensus not to adopt the Appellate Body report
pursuant to Article 17.4 of the DSU, the provisions of, inter alia, paragraph 63 (requiring destruction or return
of all material containing BCI/HSBI within a period to be fixed by the Panel) shall apply.
7 We note that there is no allegation that the BCI or HSBI information at issue has been disclosed to any
person not authorized to have access to such information in this proceeding.

- F-4 -

ANNEX F-2
THE EUROPEAN UNION'S REQUESTS OF 28 MAY 2013 CONCERNING: (I) THE UNITED STATES'
FULL HSBI VERSION APPENDIX AND HSBI EXHIBITS SUBMITTED IN CONJUNCTION WITH ITS
ANSWERS TO THE PANEL'S FIRST SET OF QUESTIONS; AND (II) THE UNITED STATES'
ALLEGED VIOLATIONS OF THE BCI/HSBI PROCEDURES
(Panel ruling issued on 5 June 2013)
1. The Panel refers to the European Union's request for an interim ruling of 28 May 2013
concerning a number of matters related to the United States' answers to the Panel's questions to
the parties issued on 23 April 2013 ("Panel's questions"), and the United States' comments on the
European Union's request, which were received on Friday 31 May 2013.
2. In this communication, the Panel addresses the European Union's requests for rulings with
respect to: (i) the United States' Full HSBI Version Appendix ("HSBI Appendix") submitted in
conjunction with its answers to the Panel's questions; (ii) the United States' HSBI exhibits
submitted in conjunction with its answers to the Panel's questions; and (iii) alleged violations of
the Additional Working Procedures for the Protection of Business Confident ial Information and
Highly Sensitive Business Information ("BCI/HSBI Procedures").
3. The European Union has also requested the Panel to reject certain arguments and evidence on
the grounds that they should have been addressed by the United States earlier in these
proceedings.1 The Panel will rule on this aspect of the request as soon as possible.
1 THE UNITED STATES' FULL HSBI VERSION APPENDIX
4. The European Union asserts that, on 24 May 2013, the Unit ed States provided the
European Union with only one locked CD containing the HSBI Appendix submitted in conjunction
with its answers to the Panel's questions. The European Union submits that paragraph 58(g) of the
BCI/HSBI Procedures requires the United States to provide two such CDs. The European Union
explains that the United States' failure to provide two CDs means that its agents for this dispute
do not have access to the HSBI Appendix in the short time available to prepare comments on the
United States' answers to the Panel's questions. The European Union argues that extending the
deadline for the parties to comment on each other's answers to the Panel's questions beyond
12 June 2013 will exacerbate the prejudice it has suffered, as members of its delegation have
scheduled commitments in the two weeks following 1 2 June 2 013, and thereafter, on
27 June 2013, the European Union will receive the United States' first written submission in the US
– Large Civil Aircraft (Article 21.5) dispute. In addition, the European Union argues that any
extension of the deadline for both parties would allow the United States to benefit from their own
breach of the rules. Thus, the European Union requests that the Panel reject the United States'
HSBI Appendix as untimely filed.2
5. The United States expresses regret for this oversight bu t points out that the European Union
could have advised the United States of this problem on 24 May when it received the first CD, with
a view to arranging with the United States for delivery of the second CD to Geneva or Brussels by
27 May 2013. Instead, the European Union chose to formally complain to the Panel on 28 May; a
choice which was not geared to minimize delay or any prejudice arising from such delay. The
United States advises that it has consulted with the European Union and has made arrangement s
to deliver a second copy of its HSBI Appendix directly to a European Union representative in
Brussels.3
6. The Panel agrees with the European Union, and the United States acknowledges, that
paragraph 58(g) of the BCI/HSBI Procedures required the United Sta tes to provide two copies of

1 European Union, Request for Interim Ruling of 28 May 2013, paras. 11-21.
2 European Union, Request for Interim Ruling of 28 May 2013, paras. 3-5.
3 United States, Reply to EU Request for Interim Ruling, 31 May 2013, para. 3.

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its HSBI Appendix in the form of two locked CDs to the European Union. The Panel notes that this
HSBI Appendix includes information relating to nine of the 72 questions that were answered by the
United States. The United States ' failure to provide a second CD as required means that some of
the European Union's agents, which the European Union has explained operate out of at least two
cities, Geneva and Brussels, could not access the HSBI Appendix at the time they were entitled t o.
Although it appears that arrangements have been made to deliver the second CD to a
European Union representative in Brussels, the delay occasioned by this oversight nonetheless
could adversely affect the European Union's ability to prepare its comments to the United States'
answers to the Panel's questions within the deadline set by the Panel.
7. As a usual matter, providing an extension of time to compensate for a delay in the submission
of information would be the logical way to ensure that a party is ab le to fully respond to late -
submitted information. However, the European Union argues that extending the deadline in this
case would "only serve to heighten the prejudice suffered by the European Union"4, as members of
its delegation have scheduled certain (unspecified) commitments in the two weeks following the
current deadline of 12 June 2013, and immediately thereafter will receive the United States' first
written submission in US – Large Civil Aircraft (Article 21.5). While the Panel is sympathetic to t he
demands that this large and complex dispute places upon delegations, especially as it is running in
parallel to EC – Large Civil Aircraft (Article 21.5), 5 we see no reason to believe that with an
adequate extension of time the European Union would be un able to respond fully to the
information in question. Nor do we consider the United States' oversight so egregious as to
warrant the rejection of the HSBI Appendix where, as here, it is not necessary in order to protect
the European Union's ability to participate fully in this dispute.
8. The Panel observes that the United States' failure to follow the instructions in paragraph 58(g)
of the BCI/HSBI Procedures means that the European Union will receive the second CD several
days after it was entitled to receiv e it under the BCI/HSBI Procedures. In this light, the Panel
decides as follows. First, the Panel directs the United States to deliver the second CD as soon as
possible, if it has not already done so, and to inform the Panel as soon as it has been delivere d.
Second, the Panel extends the deadline for the European Union to submit its comments on the
United States' answers to questions to Wednesday, 26 June 2013, that is, an extension of 14 days.
While the Panel considers that this should compensate for the d elays in the United States'
response, if the European Union considers that it is unable to respond fully in this time, the Panel
will consider any justified request for a further extension. Third, we direct the United States to
submit, only to the Panel an d not the European Union , its comments on the European Union's
answers to the Panel's questions as per the current deadline, on 12 June 2013; the United States
is requested to submit the same document to the European Union on 26 June 2013 in accordance
with the relevant procedures.
2 THE UNITED STATES' HSBI EXHIBITS
9. The European Union raises three objections concerning the submission by the United States of
HSBI exhibits with its responses to questions from the Panel. First, the United States filed the
HSBI exhibits during the afternoon of Friday, 24 May 2013, rather than the due date for the
answers to the Panel's questions, which was Wednesday 22 May. Second, the United States had
indicated, in response to an inquiry by the European Union, that it would not be making the HSBI
exhibits available for viewing on a secure laptop at the United States' Mission to the
European Union in Brussels until 28 May 2013. Third, the United States failed to provide an HSBI
version of Exhibit US-505.6 The European Union requests that, in light of these problems, which it
asserts have seriously hampered its ability to prepare comments on the United States' answers to
the Panel's questions by 12 June 2013, the United States' HSBI exhibits should be rejected as
untimely filed.7

4 European Union, Request for Interim Ruling of 28 May 2013, para. 4.
5 Throughout these proceedings, the parties have at times had to work on both disputes simultaneously.
In this respect, we note that the European Union's first written submission in US – Large Civil Aircraft
(Article 21.5) was received by the United States two weeks before the substantive meeting with the Panel in
this dispute. Moreover, the Panel in this dispute asked the United States to respond to 72 direct questions
following the substantive meeting, during a period when the United States was no doubt preparing its first
written submission in US – Large Civil Aircraft (Article 21.5).
6 James V. Jordan, NERA, Reply to Professor Whitelaw's Response to Jordan Report, 19 May, 2013.
7 European Union, Request for Interim Ruling of 28 May 2013, para. 10.

- F-6 -

2.1 United States' HSBI Exhibits Filed with the Secretariat on 24 May
10. The HSBI exhibits cited by the United States in its answers to the Panel's questions were filed
at the WTO in Geneva on 24 May 2013. The European Union objects that the US HSBI exhibits
were not filed by the due date for the submission, which was 22 May 2013. The European Union
argues that, while paragraph 58(h) of the BCI/HSBI procedures requires only that a party shall
have commenced transfer of the locked CDs containing the HSBI Appendix to a submission no
later than the deadline for submission (and thus contemplates that such HSBI may be received
one to two days after the filing deadline), no such allowance is made for HSBI exhibits.8
11. The United States responds that it makes every effort to send HSBI documents early so that
they arrive in Geneva on the submission date, even though the quickest delivery option is for
arrival on the second day after transmission. Nevertheless, for a lengthy written submission
containing HSBI, exhibits are us ually finalized along with the submission. The United States
considers that it would be unfair to require the United States to complete all such submissions two
days earlier than the deadline solely because the distance between the United States and Geneva
is greater than the distance between Brussels and Geneva.9
12. Paragraphs 49 and 50 of the BCI/HSBI Procedures require the United States to make its HSBI
available, in electronic or hard copy form, at both the WTO Secretariat and at the United States
mission in Brussels. These provisions do not, however, indicate precisely when such HSBI must be
made available at these locations. Guidance as to the timing of the submission of the HSBI
Appendix may be found in paragraph 58(h) of the BCI/HSBI Procedures. Paragr aph 58(h) requires
parties to "commence transfer" of the locked CDs containing the HSBI Appendix no later than the
deadline for the submission concerned. This rule permits a party, if necessary, to prepare the HSBI
Appendix up until the date of deadline for its submission, meaning that it is possible that there will
be a delay of a day or two after the deadline until receipt of the HSBI Appendix by the other
party.10
13. Paragraph 58(h) does not explicitly refer to HSBI exhibits. However, a party's HSBI Appendi x
will necessarily make reference to HSBI exhibits. 11 It would be incongruous to permit a party to
continue with the preparation of its HSBI Appendix up until the due date for the submission, but to
require that HSBI exhibits, which must also comply with the special transfer requirements for HSBI
set forth in paragraphs 49 and 50 of the BCI/HSBI Procedures, be received by the other party by
the due date for the submission. Such an interpretation would mean that a party would need to
have "commenced transfer" of HSBI exhibits one to two days before it had finalized the HSBI
Appendix that refers to those exhibits. In practice, this would mean that parties would need to
finalize their HSBI Appendix prior to the deadline for its completion envisaged in paragraph 58(h).
In this light, the BCI/HSBI Procedures must be interpreted to permit parties to submit HSBI
exhibits at the same time as they submit the HSBI Appendix. For this reason, we do not consider
that the United States' HSBI exhibits submitted to the WTO Se cretariat on 24 May 2013 to be
untimely filed.
2.2 United States Failure to Make Available US HSBI Exhibits at the US HSBI Location in
Brussels
14. The European Union notes that, in scheduling an appointment for EU HSBI Approved Persons
at the United States' HSBI location in Brussels on 24 May 2013, the European Union was informed
that the United States' HSBI exhibits would not be uploaded to the secure laptop until
28 May 2013. The United States responds that the HSBI exhibits w ere delivered to Brussels on
27 May 2013, which was a holiday in the United States and was no t a business day for the
United States Mission to the European Union in Brussels. The HSBI exhibits were thus available for

8 European Union, Request for Interim Ruling of 28 May 2013, para. 7, footnote 4.
9 United States, Reply to EU Request for Interim Ruling, 31 May 2013, para. 4.
10 HSBI cannot be submitted via email. It is transmitted to the Panel in electronic form using locked CDs
or sealed laptops. Parties are required to keep electronic or hard copies of HSBI it submits to the Panel in its
HSBI location, for access by HSBI Approved Persons of the other party, see paragraphs 49 and 50 of the
BCI/HSBI Procedures.
11 There were a total of nine questions in which the United States referred to HSBI in the answers, and
thus which were part of the US Full HSBI Version Appendix. In responding to these nine questions, the
United States referred to a total of 33 HSBI exhibits.

- F-7 -

viewing, and were viewed by the European Union, on 28 May 2013. 12 The United States submits
that the HSBI material is a small portion of the overall submission, and in the "unlikely" event that
a short delay in access to the HSBI exhibits would adversely affect the European Union, the
United States would be flexible in providing a solution consistent with the BCI/HSBI Procedures.
15. Paragraph 50 of the BCI/HSBI Procedures requires the United States to make its HSBI
available for access by EU HSBI Approved Persons at the United States Mission to the
European Union in Brussels. 13 As noted above, we understand paragraph 58(h) of the BCI/HSBI
Procedures to apply to HSBI exhibits as well as to the HSBI Appendix, and the United States'
obligation was thus to "commence transfer" of its HSBI exhibits to Brussels by Wednesday
22 May 2013. Although the United States has not directly spoken to this point, we would have
expected that the United States would have been able have those HSBI exhibits delivered to
Brussels and uploaded by Friday 24 May 2013, as in the case of Geneva. The United States' failure
to do so is problematic. That impact of that failure was exacerbated by the fact that 27 May was
an official holiday in the United States and that the United States Mission in Brussels was closed. 14
As a result, the European Union's access to t he United States' HSBI exhibits was delayed by four
days, a not insignificant period given that the European Union's comments were due nine days
later, on 12 June 2013.
2.3 United States Failure to Provide a HSBI Version of Exhibit US-505
16. The European Unio n objects to the United States' failure to pro vide an HSBI version of
Exhibit US-505, which is a report prepared by a US consultant addressing alleged benefits from
LA/MSF for the A350XWB challenged by the United States. 15 The United States submitted a BCI
version of this report on 22 May 2013, but the European Union notes that calculations and data on
which the consultant appears to rely are treated as HSBI and redacted from the BCI version. This
being so, the BCI version is of little use to facilitate the preparation of the European Union's
comments, because the European Union cannot review the HSBI calculations and data on which
the consultant and the United States appear to rely. For the reasons already outlined above, the
European Union believes that an extension of the deadline for it to comment would not remedy the
prejudice it has suffered as a result of not having access to the HSBI version of Exhibit US -505
(BCI). Accordingly, the European Union requests that the Panel reject Exhibit US -505 (BCI) as
being untimely filed.
17. The United States advises that it has corrected this oversight. 16 The United States argues
that, when an oversight causes a minor delay, the obvious fix, if a fix is necessary, is to grant a
short extension, rather than to reject proba tive evidence. A rejection of probative evidence
because of professed commitments of one party would be highly unusual, patently unfair and not
in the interest of an objective determination by the Panel.
18. The Panel observes the HSBI version of Exhibit US -505 (BCI), like the other HSBI exhibits
filed with the United States HSBI Appendix, should have been made available in Geneva and in
Brussels by 24 May 2013. The United States advises that it has now corrected its oversight, by
which the Panel assumes that the United States is making available the HSBI version of Exhibit
US-505 (BCI), at the WTO Secretariat and at the United States Mission to the European Union in
Brussels, by Wednesday 3 June 2013. Indeed, the United States made this exhibit available at th e
WTO Secretariat in Geneva yesterday, 4 June 2013. While the Panel welcomes the United States'
corrective action, the fact remains that the European Union's ability to review the HSBI version of
this exhibit has been delayed by 11 days.
2.4 Conclusion
19. The Panel considers that the United States' failure to make available the HSBI exhibits at its
HSBI location in Brussels by 24 May 2013 and to provide an HSBI version of Exhibit US -505 (BCI)
could adversely affect the European Union's ability to prepare its co mments to the United States'

12 United States, Reply to EU Request for Interim Ruling, 31 May 2013, para. 5.
13 The "HSBI location" identified in paragraph 9 of the BCI/HSBI Procedures.
14 Paragraph 53 of the BCI/HSBI Procedures provides that the "designated room" in which HSBI is kept
at this location shall be available from 9 am until 5 pm during official working days at that HSBI location.
15 James V. Jordan, NERA, Reply to Professor Whitelaw's Response to Jordan Report, 19 May 2013.
16 United States, Reply to EU Request for Interim Ruling, 31 May 2013, para. 6.

- F-8 -

answers to the Panel's questions by the 12 June 2013 deadline set by the Panel. However, we
consider that our decision to extend the deadline for the European Union to submit its comments
on the United States' answers to questi ons to Wednesday, 26 June 2013 sufficiently addresses the
risk of any such prejudice arising. We further recall that, if the European Union considers that it is
unable to respond fully by that date, the Panel will consider any justified request for a furth er
extension. Under these circumstances, we do not consider that the failures on the part of the
United States merit the Panel's rejection of the United States' HSBI exhibits as untimely filed.
20. More generally, the Panel has found in sections 1 and 2 of thi s ruling that the United States
has failed on a number of occasions to provide information in a timely manner pursuant to the
requirements of the BCI/HSBI Procedures applicable in this case. Such failures are unfortunate,
and the Panel strongly urges the U nited States to redouble its efforts to fully comply with these
Procedures. At the same time, the Panel is conscious of the unusual scale of this case, which
involves thousands of pages of submissions and thousands of exhibits, and that application of
highly complex BCI/HSBI Procedures in this context is a challenge. Under these circumstances,
and in the absence of any indication that the errors committed by the United States were
intentional, our focus is properly on ensuring that the Procedures are applie d correctly going
forward, and that the ability of the European Union to properly defend its case not be
compromised. We see no reason to take punitive action that would prevent this Panel from
accepting evidence and argument that could assist us in perfor ming our task of performing an
objective examination of the matter before us.
3 ALLEGED VIOLATIONS OF THE BCI/HSBI PROCEDURES
3.1 Alleged Transmission of BCI by Non-Secure Email
21. The European Union objects that the United States transmitted the BCI versions of its answers
to the Panel's questions by "non -secure" email, in a departure from prior practice in which BCI
versions of submissions have been made by delivery of CDs. The European Union requests the
Panel to take remedial action to reassure stakeholders fro m whom BCI originates that breaches of
the BCI Procedures will not be tolerated.
22. The United States advises that the transmittal on 22 May 2013 of the United States answers
to the Panel's questions containing BCI by email was an inadvertent error. To avoid any repetition,
it has sent instructions to all United States' BCI and HSBI Approved Persons in this dispute
emphasizing proper procedures regarding electronic transmission of BCI. The United States
considers that the warning and reminder are sufficient t o assure future compliance, and that any
further action is unnecessary.17
23. Paragraph 43 of the BCI/HSBI Procedures provides that documents containing BCI may be
transmitted electronically only by using "secure" email. The BCI/HSBI Procedures do not define
what is meant by "secure" e -mail. The European Union does not explain why the United States'
transmission by e-mail of its answers to the Panel's questions (containing BCI) was not by "secure"
email, although it appears that the United States agrees that the email transmission of its answers
to the Panel's questions was erroneous. The Panel welcomes the parties' suggestions as to email
protocols that would be acceptably secure, with a view to amending the BCI/HSBI Procedures to
include a clear definition as t o what is meant by "secure" email. In the meantime, the Panel takes
note of the action that the United States has taken to remind its agents of the proper procedures
regarding electronic transmission of BCI and has decided not to take any further action at present.
3.2 Alleged Access to European Union BCI and HSBI by Somebody Other than an
Approved Person
24. The European Union notes that the United States' answers to the Panel's questions refer to a
report by Dr Chetan Sanghvi which refers in multiple places to t wo EU BCI and HSBI exhibits. 18

17 United States, Reply to EU Request for Interim Ruling, 31 May 2013, para. 12.
18 Expert Declaration of Dr Chetan Sanghvi, NERA, 21 May 2013, Exhibit US-530. The two EU exhibits to
which Dr Sanghvi's report refers are Christophe Mourey, "Statement on Current Competitive Conditions in the
LCA Industry" 4 July 2012, Exhibit EU-8, which was submitted as BCI and Christophe Mourey, "Supplemental
Statement on current competitive conditions in the LCA industry", 12 December 2012, Exhibit EU-124, which
was submitted as HSBI with a BCI version prepared also.

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The United States notified Dr Sanghvi as a person approved to access BCI and HSBI only on
15 May 2013, while his report is dated 21 May 2013. The European Unio n considers it unlikely that
Dr Sanghvi prepared the report in the six days between 15 and 21 May 2013. Moreover, the
European Union notes that it did not prepare a redacted version of the two exhibits and that
Dr Sanghvi did not access the delegation of the European Union to the United States (the EU HSBI
location) subsequent to 15 May 2013. The European Union considers that the foregoing factors
demonstrate that US Approved Persons provided Dr Sanghvi with access to BCI and HSBI prior to
his designation as a BCI or HSBI Approved Person, in violation of the BCI/HSBI Proce dures. The
European Union requests that Dr Sanghvi be removed from the Approved Person's list, and that
his report be rejected. In addition, the European Union requests that the Panel seek information
from the United States regarding the identity of the Ap proved Persons who disclosed EU BCI and
HSBI to Dr Sanghvi, that those persons be removed from the Approved Persons list because of
their disregard for the BCI/HSBI Procedures, and that the Panel notify the panel in US – Large Civil
Aircraft of the identit y of the US Approved Persons found to have violated the BCI/HSBI
Procedures. Finally, the European Union requests the Panel to take any further action it deems
necessary and appropriate to reassure the stakeholders from whom BCI and HSBI originates in
these proceedings that breaches of the BCI/HSBI Procedures will not be tolerated.
25. The United States characterizes the European Union's accusation that US Approved Persons
disclosed EU BCI and HSBI to Dr Sanghvi before notifying him as an Approved Person as
"completely unfounded" and "absolutely false". 19 The United States criticizes the European Union
for not first seeking an explanation and assurance from the United States regarding Dr Sanghvi's
access to BCI and HSBI before making "reckless" assertions to the Panel. The United States
asserts that Dr Sanghvi did much of his work based on extensive non-BCI, and did not have access
to BCI or HSBI prior to 15 May 2013.
26. The European Union makes serious allegations against the United States and US Approved
Persons. The United States strenuously denies those allegations. The Panel recognizes that its
ability to conduct an objective assessment of the matter in this proceeding depends in large part
on the quality of the evidence that the parties place before it, and thu s understands the
importance of assuring stakeholders that commercially-sensitive material will be handled strictly in
accordance with the BCI/HSBI Procedures. Given the circums tances outlined by the
European Union, and the importance that both parties have full confidence in the integrity of these
confidential information submitted in this dispute, the Panel requests the United States to provide,
by 10 June 2013 , a fuller explanation of the manner in which Dr Sanghvi's report was prepared,
given Dr Sang hvi's late status as an approved person. The Panel will defer its decision on this
aspect of the European Union's request until it has considered the United States' explanation.
4 CONCLUSION
27. In summary, after carefully considering the European Union's request f or an interim ruling
and the United States' response, the Panel has decided to:
a. With respect to the European Union's request to reject the United States' Full HSBI
Version Appendix as untimely -
i. decline the European Union's request;
ii. direct the United States to deliver the second CD to a European Union representative
in Brussels as soon as possible, if it has not already done so, and to inform the Panel
as soon as it has been delivered;
iii. extend the deadline for the European Union to su bmit its comments on the
United States' answers to questions to Wednesday, 26 June 2013 , that is, and
extension of 14 days; and
iv. direct the United States to submit, only to the Panel and not the European Union , its
comments on the European Union's answers to the Panel's questions as per the
current deadline, on 12 June 2013 . The United States is also directed to submit the

19 United States, Reply to EU Request for Interim Ruling, 31 May 2013, para. 13.

- F-10 -

same document filed with the Panel on 12 June 2013 to the European Union on
26 June 2013 in accordance with the relevant procedures.
b. With respect to the Europe an Union's request to reject the United States' HSBI Exhibits
as untimely -
i. decline the European Union's request;
ii. direct the United States to provide, at the US HSBI location in Brussels, a HSBI
version of Exhibit US -505 (BCI) as soon as possible, if it h as not already done so,
and to inform the Panel when it has done so;
iii. extend the deadline for the European Union to submit its comments, as indicated in
paragraph 26(a)(iii) and (iv) above.
c. With respect to the European Union's allegations of violations of the BCI/HSBI
Procedures -
i. decline the European Union's requests for remedial action concerning the use of non -
secure email to transmit the BCI versions of the United States' answers to the
Panel's questions;
ii. request the United States to provide, by 10 June 2013, a fuller explanation of the
manner in which Dr Sanghvi's report was prepared, given Dr Sang hvi's late status as
an approved person, and to defer the European Union's requests until it has
considered the United States' explanation.
28. Finally, the Panel recalls that the European Union's request for an interim ruling also asks the
Panel to reject certain arguments and evidence on the grounds that they should have been
addressed by the United States earlier in these proceedings. As noted above, the Panel will issue a
ruling on this request as soon as possible. In the meantime, both parties should proceed on the
basis that the information that is the subject of the European Union's request continues to be part
of the record of this dispute.

- F-11 -

ANNEX F-3
THE EUROPEAN UNION'S REQUESTS OF 28 MAY 2013 CONCERNING: (I) THE UNITED STATES'
ALLEGED FAILURE TO MAKE A PRIMA FACIE CASE AND THE "BACK-LOADING" OF
ARGUMENTS AND EVIDENCE; AND (II) THE UNITED STATES' ALLEGED
UNAUTHORIZED ACCESS TO EUROPEAN UNION BCI/HSBI
(Panel ruling issued on 12 June 2013)
1. The Panel refers to the European Union's request for an interim ruling of 28 May 2013
concerning a number of matters related to the United States' answers to the Panel's questions to
the parties issued on 23 April 2013 ("Panel's Questions") and the United States' comments on the
European Union's request, which were received on Friday 31 May 2013. The Panel recalls that it
has previously issued rulings on two of the four requests made by the European Union. 1 In this
communication, the Panel informs the parties of its rulings with respect to the European Union's
remaining requests, namely, that certain arguments and evidence of the United States be rejected
on the grounds that they should have been addressed by the United S tates earlier in these
proceedings, and that the Panel should reject a report by an outside advisor on the grounds that
the advisor was given access to BCI/HSBI prior to designation as a BCI/HSBI Approved Person.2
1 THE EUROPEAN UNION'S COMPLAINTS CONCERNIN G THE "BACKLOADING" OF
EVIDENCE
2. The European Union argues that the prompt provision of evidence is particularly important in
compliance cases, and that in this case "the United States' belated provision of evidence necessary
to support the elements of its prima facie case is legion." Even assuming that the United States
had previously submitted evidence sufficient to establish the elements of its claims, the
European Union argues, the United States made a "strategic decision" in these proceedings to
forego the "first opportunity" available to it to respond to certain evidence and argument advanced
by the European Union in its second written submission, and its attempt to provide a response to
these European Union submissions in its answers to the Panel's Qu estions following the
substantive meeting is untimely, prejudices its own ability to defend its interests as well as the
Panel's ability to discharge its duties, and for these reasons should be rejected. 3 The
European Union points to three specific instanc es where it considers the United States' alleged
"backloading" of argument and evidence has compromised the European Union's ability to make its
defence as well as the Panel's ability to conduct an objective assessment.
3. The first concerns the Expert Declaration of Dr Chetan Sanghvi, submitted by the United States
as Exhibit US -530 (the "Sanghvi Report"). According to the European Union, the Sanghvi Report
purports to set out a comprehensive product market delineation on behalf of the United States "for
the first time".4 The European Union recalls that, in the original proceeding in this dispute, the
Appellate Body found that establishing the relevant product market or markets at issue is a
"prerequisite for assessing whether" adverse effects "could be found to exist as alleged by the
United States".5 The European Union argues that, given that the proper delineation of the product
markets is a prerequisite for the United States' adverse effects claims, it is not acceptable for the
United States to "withhold e vidence" purporting to offer a comprehensive evaluation of the
relevant LCA product markets until all written submissions and the meeting with the Panel have
passed. The European Union therefore requests that the Panel reject the Sanghvi Report, "lest the
Panel be seen as making the case for the United States".6

1 Communication from the Panel, dated 5 June 2013.
2 European Union, Request for Interim Ruling of 28 May 2013, paras. 11-21.
3 European Union, Request for Interim Ruling of 28 May 2013, paras. 13, 17, 19 and 21.
4 Expert Declaration of Dr Chetan Sanghvi, NERA, 21 May 2013, Exhibit US-530 ("Sanghvi Report"), see
European Union, Request for Interim Ruling of 28 May 2013, para. 15.
5 Appellate Body Report, EC – Large Civil Aircraft, para. 1128. See also Appellate Body Report, Canada –
Renewable Energy, para. 5.169.
6 European Union, Request for Interim Ruling of 28 May 2013, para. 17.

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4. The second and third instances of alleged "backloading" by the United States concern part of
the United States' answer to Panel Question 67, and the Reply to Professor Whitelaw's Response to
the Jordan Report, submitted by the United States as Exhibit US -505 ("Jordan Reply to Whitelaw's
Response Report"), respectively. 7 In relation to the first alleged instance of "backloading", the
European Union objects particularly to the fact that, in addition t o answering the Panel's question,
the United States response to Panel Question 67 addresses the campaign -specific arguments of
the European Union that appeared in its second written submission.8 Similarly, the European Union
explains that the Jordan Reply to Whitelaw's Response Report addresses a number of issues that
were raised in a report by Professor Robert Whitelaw and submitted by the European Union as an
exhibit to its second written submission.9
5. The European Union argues that in both instances, the United States had 13 weeks from the
filing by the European Union of its second written submission to the date of the meeting with the
Panel to develop its comments on the relevant arguments, and was fully capable of delivering
them in its opening statemen t at the meeting with the Panel. The European Union submits that
responding to its arguments during the meeting with the Panel would have permitted both the
Panel and the European Union to engage with the United States' arguments at the meeting, and
would have provided an opportunity for the Panel to consider additional questions to the parties
about any assertions made by the United States at the meeting. According to the European Union,
the United States instead made a "strategic decision" to "withhold it s comments" on the
European Union's arguments concerning the campaign -specific lost sales allegations and the
alleged benefits of LA/MSF for the A350XWB (as articulated in the Jordan Reply to Whitelaw's
Response Report) until after the substantive meeting with the Panel.
6. The European Union considers that there should be consequences for the United States'
"backloading", "lest it undermine the Panel's ability to make an objective assessment, and the
European Union's ability to make its defense".10 Accordingly, the European Union requests that the
Panel reject: (a) any material included in the United States answer to Panel Question 67 that
addresses, in addition to the Panel's Question, the United States' response to the campaign -
specific European Union argume nts that appeared in its second written submission; and (b) the
Jordan Reply to Whitelaw's Response Report submitted by the United States as Exhibit US-505.11
2 THE UNITED STATES' RESPONSE TO THE EUROPEAN UNION'S COMPLAINTS
7. The United States denies that it has "backloaded" evidence and argues that it is not barred
from submitting additional evidence and argumentation after its first written submission to rebut
the European Union's arguments, and to respond to questions from the Panel. 12 The United States
argues that paragraph 15 of the Working Procedures demonstrates that the Panel envisaged at the
outset that the parties would submit factual information through their responses to questions from
the Panel.13 If the parties did nothing more in their responses t o the Panel's questions than repeat
statements they had previously made, the question process would be futile and unhelpful to the
Panel.14
8. As to the specific instances of "backloading" alleged by the European Union, the United States
responds, first, that the Sanghvi Report was submitted in direct response to: (a) questions from
the Panel about product markets, and particularly with respect to the application of competition
law concepts to the product market inquiry; and (b) the European Union's arguments, made in its

7 James V. Jordan, NERA, Reply to Professor Whitelaw's Response to Jordan Report, 19 May 2013,
Exhibit US-505 (BCI/HSBI) ("Jordan Reply to Whitelaw Response Report").
8 United States, Answer to Panel Question 67.
9 Robert Whitelaw, Response to Dr Jordan's Report on the Benefits of MSF, 3 December 2012, Exhibit
EU-121 (BCI/HSBI) ("Whitelaw Response to Jordan Report").
10 European Union, Request for Interim Ruling of 28 May 2013, paras. 19 and 21.
11 European Union, Request for Interim Ruling of 28 May 2013, paras. 19-21.
12 United States, Reply to EU Request for an Interim Ruling, 31 May 2013, para. 7.
13 Paragraph 15 of the Panel's Working Procedures provides that "parties shall submit all factual
evidence to the Panel no later than their first written submissions, other than evidence necessary for purposes
of rebuttals and answers to questions."
14 United States, Reply to EU Request for an Interim Ruling, 31 May 2013, para. 7.

- F-13 -

second written submission and at the meeting with the Panel, concerning the proper delineation of
the product markets which it had supported by reference to a consultant's NPV calculations.15
9. Second, the United States notes that Panel Question 6 7 sought the identification of the airlines
involved in specific sales campaigns and whether Boeing LCA were considered. The United States
argues that this inquiry clearly implicates the United States' lost sales claims related to the sales
campaigns identified in paragraphs 417 through 503 of the United States' first written submission.
The United States submits that it was appropriate and helpful to the Panel's task of making an
objective assessment, to address the European Union's arguments about those s ales campaigns.
The United States rejects the suggestion that it was precluded from making such arguments
because it had not done so in the same detail in its opening statement at the meeting with the
Panel. The United States argues that a rule in which pa rties effectively waived any argument
omitted from their oral statements would force them to mention every potential argument in their
oral statement. Moreover, no such rule appears in the Panel's Working Procedures.16
10. Third, with respect to the submission by the United States in its answers to the Panel's
questions of the Jordan Reply to Whitelaw's Response Report, the United States notes that, while
the Panel had described the United States' opening statement at the meeting with the Panel as the
"first opportunity" at which the United States could have responded to the Whitelaw Response to
Jordan Report, it nowhere found that it was also the last opportunity.
3 EVALUATION BY THE PANEL
3.1 General Considerations
11. We note at the outset that the European Union does not assert that the alleged "backloading"
of arguments and evidence by the United States has been made contrary to the Working
Procedures. Paragraph 15 of the Working Procedures provides that the parties shall submit all
factual evidence to the Panel no la ter than their first written submissions, other than evidence
necessary for purposes of rebuttals and answers to questions .17 The European Union does not
allege that the Sanghvi Report, the United States answer to Panel Question 67 or the Jordan Reply
to Wh itelaw's Response Report were not submitted in accordance with paragraph 15 of the
Working Procedures as evidence necessary for purposes of rebuttals and answers to questions.
Indeed, we consider that the Sanghvi Report, the United States' answer to Panel Question 67 and
the Jordan Reply to Whitelaw Report were submitted in conformity with paragraph 15 of the
Working Procedures.18
12. However, in conducting an objective assessment of the matter as required by Article 11 of the
DSU, the Panel is bound to ensure t hat due process is respected. 19 Although panel working
procedures should embody and reinforce due process, the question whether a panel has
guaranteed due process in any specific situation is not simply a question of whether the working
procedures have been complied with.20

15 United States, Reply to EU Request for an Interim Ruling, 31 May 2013, para. 9.
16 United States, Reply to EU Request for an Interim Ruling, 31 May 2013, para. 10.
17 Paragraph 15 further provides that exceptions to this procedure may be granted upon a showing of
good cause. In such a case, the other party shall be accorded a period of time for comment on the newly
submitted evidence, as the Panel deems appropriate.
18 The United States' explanations countering the European Union's campaign-specific arguments in its
answer to Panel Question 67 are contained in paragraphs 269, 270, 271, 272, 273, 274, 275, 276, 279, 281,
282, 283, 284, 285, 286, 287, 289, 290, 291, 292, 293, 294, 295, 297, 298, 299, 301, 302, 303, 306, 308,
310, 311, 313, 314 and 315. Our review of this information shows that it consists essentially of: (a) re-
statements of the United States' arguments concerning lost sales contained its first and second written
submissions; (b) references to the panel's and the Appellate Body's findings in the original DS316 dispute; and
(c) specific responses to some arguments made by the European Union in its second written submission
concerning lost sales.
19 Due process is a fundamental principle of WTO dispute settlement. The Appellate Body has stated that
due process is intrinsically connected to notions of fairness, impartiality and the rights of parties to be heard
and to be afforded an adequate opportunity to pursue their claims, make out their defences, and establish the
facts in the context of proceedings conducted in a balanced and orderly manner, according to established rules,
see Appellate Body Report, Thailand – Cigarettes (Philippines), para. 147.
20 Appellate Body Report, Thailand – Cigarettes (Philippines), para. 148.

- F-14 -

13. It is well established that a panel must not make a " prima facie case" for a party who bears
the burden of proof in relation to a claim or a defence. 21 However, this does not mean that a panel
must make a specific finding that a complainant has met its burden to establish a prima facie case
in respect of a particular claim, or that a respondent has effectively rebutted a prima facie case.22
Similarly, a panel is not required to make a finding as to whether a complainant has established a
prima facie case before it examines the respondent’s arguments and evidence. 23 Indeed, WTO
dispute settlement proceedings do not involve any particular temporal sequence of proof. Both
parties will adduce evidence in support of their own arguments or to rebut the arguments made by
the other at various stages of a dispute, sometimes simultaneously, throughout the entirety of a
proceeding.
14. The "objective assessment of the matter" that a panel is calle d upon to perform under
Article 11 of the DSU requires it to ca refully and independently scrutinize the parties' arguments
and any evidence submitted in support of those arguments, with a view to clarifying their meaning
and exploring their implications for the particular claims being made. Consistent with this
obligation, and in the light of the extremely voluminous and complex issues that have been raised
in this dispute, we believe that our evaluation of the merits of the United States' claims must be
conducted on the basis of a full appreciation of all of the parti es' arguments and the evidence
adduced in support of those arguments throughout the course of this proceeding. The fact that we
must discharge this responsibility in a compliance proceeding in which it was envisaged that the
parties would hold only one sub stantive meeting with the Panel raises particular complications.
This is one reason why we decided to pose a relatively large number of questions to the parties
following the meeting, and why we informed the parties at the end of the substantive meeting in
April 2013 that we may well need to pose additional questions and/or hold an additional meeting
with the parties as our analysis of the arguments and evidence progresses.24
15. Needless to say, it is a basic requirement of due process that each party be affor ded a
meaningful opportunity to comment on the arguments and evidence adduced by the other party.
This due process interest must be balanced against other interests, including systemic interests
such as those reflected in Articles 3.3 and 12.2 of the DSU. 25 As the Appellate Body has stated,
panels are best situated to determine how this balance should be struck in any given proceeding,
provided that they are vigilant in the protection of due process and remain within the bounds of
their duties under Article 11 of the DSU.26
16. With these considerations in mind, we now turn to address the European Union's particular
requests.
3.2 The United States' Alleged "Strategic Decision" to "Withhold" Evidence and
Argument
17. The European Union makes a number of specific objectio ns to the United States' introduction
of certain pieces of evidence and related arguments in its answers to the Panel's Questions.
Underlying the European Union's particular complaints, however, is a broader assertion that the

21 See, for instance, Appellate Body Report, Japan – Agricultural Products II, para. 129; and Appellate
Body Report, US – Shrimp (Thailand)/US – Customs Bond Directive, para. 300. A prima facie case has been
described by the Appellate Body as one that, in the absence of effective refutation by the defending party,
requires a panel, as a matter of law, to rule in favour of the complaining party presenting the prima facie case.
Appellate Body Report, US – Wool Shirts and Blouses, p. 14; and Appellate Body Report, EC – Hormones,
para. 104. The evidence and arguments underlying a prima facie case must be sufficient to identify the
challenged measure and its basic import, identify the relevant WTO provision and obligation contained therein,
and explain the basis for the claimed inconsistency of the measure with that provision. Appellate Body Report,
US – Gambling, para. 141.
22 Appellate Body Report, Thailand – H-Beams, para. 134.
23 Appellate Body Report, India – Quantitative Restrictions, para. 142.
24 In this regard, we note that it is well established that "a panel is vested with ample and extensive
discretionary authority to determine when it needs information to resolve a dispute and what information it
needs. A panel may need such information before or after a complaining or a responding member has
established its complaint or defence on a prima facie basis." Appellate Body Report, Canada – Aircraft,
para. 192. Moreover, the Appellate Body has previously explained that "panels are entitled to ask questions of
the parties that they deem relevant to the consideration of issues before them". Appellate Body Report,
Thailand – H-Beams, para. 135.
25 Appellate Body Report, Thailand – Cigarettes (Philippines), para. 150.
26 Appellate Body Report, Thailand – Cigarettes (Philippines), para. 150.

- F-15 -

United States has made a "str ategic decision" in this dispute to "withhold" relevant evidence and
argument until its answers to the Panel's Questions in a manner which undermines the Panel's
ability to make an objective assessment, and the European Union's ability to make its defense. 27
We see no reason to accept this characterization of how the United States has proceeded in this
dispute. Rather, as we explain in the sections that follow, the evidence and arguments that are the
subject of the European Union's objections were made as pa rt of the process of engagement
between the parties and with the Panel that typically characterizes WTO dispute settlement,
whereby arguments and evidence are explored and tested, and positions clarified and/or further
developed, with a view to informing the Panel's objective assessment of the matter before it.
3.3 The Sanghvi Report (Exhibit US-530)
18. The European Union's argument that the Panel should reject the Sanghvi Report appears to be
premised on the view that all evidence pertaining to issues that are a "prerequisite" or
"precondition" to establishing adverse effects must be submitted by a party at an early point in the
proceeding, and in any case before the stage at which all written submissions have been received
and the substantive meeting with the pa rties has taken place. Moreover, in suggesting that the
Panel's receipt of the Sanghvi Report at this stage of the proceeding could be seen as the Panel
making the case for the United States, it would appear that the European Union considers that the
Panel's questioning of the parties that led the United States to submit the Sanghvi Report was
inappropriate in the circumstances, and that the Panel should reject evidence responsive to those
questions.
19. The Sanghvi Report was submitted by the United States in response to a series of questions
posed by the Panel concerning the parties' diverging positions as to the proper delineation of the
relevant product markets.28
20. In its first written submission, the United States sought t o demonstrate that the
European Union had not removed the adverse effects of the subsidies the subject of the
recommendations and rulings of the DSB by reference to the three product markets identified by
the Appellate Body for purposes of its analysis of the United States' displacement cla ims on
appeal.29 The European Union responded in its first written submission that the United States'
reliance on these three product markets was insufficient, not least because of the recent
developments relating to the competitive situation in these product markets.30 The European Union
proposed an alternative delineation of the relevant product market s, relying on a statement by
Mr Christophe Mourey, among other evidence, to support its arguments. 31 The United States in its
second written submission challen ged the European Union's identification of the relevant product
markets, submitting in support of its arguments, among other evidence, a declaration from
Mr Michael Bair.32 The European Union sought to rebut the United States' arguments and evidence
concerning the relevant product markets in its second written subm ission, arguing that the
United States had failed to apply factors relevant to assessing the existence of a product market,
and to provide relevant evidence to establish the existence of the three product markets it
purported to identify. 33 In so doing, the European Union submitted, among other evidence, a
supplemental statement by Mr Christophe Mourey. 34 Although the parties addressed each other's
arguments concerning product markets at the substanti ve meeting with the Panel, neither
submitted any further evidence at that meeting. The Panel posed a number of oral questions to the
parties on product markets at the meeting for the purpose of clarifying the parties' arguments on
specific issues. These qu estions were subsequently transmitted to the parties in writing together
with several other questions on the same matter directed to both parties, to the United States and
to the European Union. The United States submitted the Sanghvi Report in support of its answers
to several of those questions. 35 The Sanghvi Report refers in various places to the Mourey

27 European Union, Request for Interim Ruling of 28 May 2013, paras. 13-14, 17, 19 and 21.
28 The United States referred to the Sanghvi Report in its answers to Panel Questions 48-51, 54, 55, 60,
61, 63, 64 and 67.
29 United States' first written submission, para. 290-294.
30 European Union's first written submission, paras. 569-570.
31 European Union's first written submission, paras. 577-633; Mourey Statement, Exhibit EU-8 (BCI).
32 United States' second written submission, paras. 438-493; Declaration of Michael Bair, Exhibit US-339
(BCI).
33 European Union's second written submission, paras. 608-705.
34 Supplemental Mourey Statement, Exhibit EU-124 (BCI/HSBI).
35 See above, footnote 28.

- F-16 -

statement, submitted by the European Union as an exhibit with its first written submission and to
the supplemental Mourey statement, submitted by the Euro pean Union as an exhibit with its
second written submission.
21. We recall that in EC – Large Civil Aircraft, the Appellate Body faulted the panel for deferring to
the United States' subsidized product allegations rather than making its own independent
assessment of whether all Airbus LCA should be treated as a single subsidized product. 36 The
Appellate Body considered that, in the absence of such a determination, the panel did not have a
proper basis for assessing whether the alleged subsidized and like produc ts competed in the same
market or multiple markets, which it described as a prerequisite for assessing whether
displacement within the meaning of Articles 6.3(a) and 6.3(b) could be found to exist as alleged by
the United States. 37 However, nothing in the A ppellate Body's delineation of the substantive
requirement to make a product market determination suggests to us that a complaining party
must establish any particular elements of the claim at any specific point in the proceeding. In
other words, the fact that the Panel will need to first define the relevant product markets in order
to determine whether the United States has demonstrated the existence of adverse effects does
not mean that, in seeking to fulfil our obligation under Article 11 of the DSU, we may not pose
questions to the parties regarding the relevant product markets after the receipt of written
submissions and the substantive meeting. Nor does it mean that the parties are prevented from
submitting information responsive to the any questions we may ask after the substantive meeting,
or that we must reject such evidence as having been presented at too late a stage in these
proceedings, subject of course to any justified due process concerns.
22. In the present proceeding, the United States claims th at adverse effects from LA/MSF and
other subsidies, in the form of significant lost sales and displacement, impedance and threat
thereof, continue through the present, based on the product markets on which the DSB's
recommendations and rulings in the origi nal proceeding are based. The United States has made
arguments and presented evidence throughout this proceeding in support of that claim. In making
an objective assessment of the United States' submissions we are required to assess the
conflicting arguments and evidence presented by the parties concerning the proper delineation of
the product markets in which Airbus and Boeing LCA compete. 38 In our view, it is therefore
appropriate, in discharging our responsibility under Article 11 of the DSU, to not only put to the
parties the questions asked on 23 April 2013 concerning the identification of the relevant product
markets, but also to evaluate the arguments and evidence submitted by the parties in response to
those questions.
23. Thus, for all of the above reas ons, we see no basis for agreeing with the European Union's
contention that it would be inappropriate for the Panel to consider the Sanghvi Report, which was
submitted by the United States in response to the Panel's Questions. We therefore decline the
European Union's request to reject the Sanghvi Report.
3.4 The United States' answer to Panel Question 67 and the Jordan Reply to Whitelaw's
Response Report (Exhibit US-505 (BCI/HSBI))
24. The European Union's requests that the Panel reject: (a) the "material" include d in the
United States' response to Panel Question 67 addressing campaign -specific arguments made by
the European Union in its second written submission; and (b) the Jordan Reply to Whitelaw's
Response Report, are based on the assertion that the United Sta tes failed to make these
submissions at the "first opportunity" available to do so, namely, in its opening statement at the
substantive meeting with the Panel in April 2013. 39 The European Union argues that the United
States' attempt to present such "materi al" in response to the Panel's Questions following the
Panel's substantive meeting with the parties undermines the Panel's ability to make an objective
assessment and the European Union's ability to make its defence.40
25. The European Union's reference to the "first opportunity" appears to derive from our
communication to the parties of 23 April 2013, enclosing the list of 109 Panel Questions. In that

36 Appellate Body Report, EC – Large Civil Aircraft, para. 1128.
37 Appellate Body Report, EC – Large Civil Aircraft, para. 1128.
38 Appellate Body Report, EC – Large Civil Aircraft, para. 1131.
39 European Union, Request for Interim Ruling of 28 May 2013, paras. 19 and 21.
40 European Union, Request for Interim Ruling of 28 May 2013, paras. 19 and 21.

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communication, we recalled that at the meeting with the parties on 18 April 2013, the
European Union objected to the United States' attempt to submit certain hand -written HSBI
calculations in support of the statements it made in paragraph 24 of its confidential oral statement
on the grounds that to receive them would be inconsistent with the Panel's Working Proced ures.
We then noted that:
"… the Whitelaw Response to the Jordan Report was submitted to the Panel as an
exhibit to the European Union's second written submission, that the United States'
oral statement was its first opportunity to address that Response, a nd t hat the
United States' calculations go directly to the significance of that Response. Under
these circumstances, the Panel considers that it is appropriate for it to now seek these
calculations from the United States, and has done so in the attached questions."41
26. In stating that the United States' oral statement was the first opportunity at which the
United States could have addressed the Whitelaw Response to Jordan Report, but in proceeding to
ask the United States to provide that response in the course of answering the Panel's Questions,
we did not suggest that a party is prevented from advancing argument or adducing evidence that
was not presented at the "first opportunity". Rather, our reference to the "first opportunity" was
simply intended to emphas ize that the United States did not have a chance to respond to the
relevant submissions any earlier than at the substantive meeting with the Panel. Our statement
was therefore not intended to preclude the possibility that the United States could address th e
relevant submissions at a later stage in the proceeding, particularl y were we to request the
United States to do so. In this connection, we note that the European Union does not refer to any
rule of procedure or other principle of due process that requir es a party in a WTO dispute
settlement proceeding to present its arguments and evidence at the "first opportunity" such that a
failure to do so requires a panel to reject such arguments and evidence as untimely.
27. Turning to the particular United States' su bmissions tha t are the focus of the
European Union's request for an interim ruling, we note that Pan el Question 67 asked the
United States to clarify certain aspects of the information submitted at paragraphs 417 to 503 of
the United States' first written submission. These paragraphs of the United States' first written
submission introduced and discussed evidence which the United States submits helps establish its
claims of serious prejudice in the form of lost sales. The Europea n Union responded to the
United States' allegations in various parts of its first written submission; and both parties engaged
with each other's lost sales arguments in their respective second written submissions. At the
substantive meeting, the United States noted that the European Union had made "a host of
campaign-specific arguments" in its second written submission, arguing that these did not "change
the basic facts surrounding the demonstrated lost sales". 42 The European Union's oral statement
did not specifically address the Unit ed States' submissions with respect to lost sales. However, the
relevance of sales campaign evidence to the question of identifying the appropriate product
markets was raised by the Panel in the questions posed to the parties at the substantive meeting,
and the parties provided oral answers. Subsequently, a series of written questions were
transmitted to both parties relating to various aspects of the United States' claims of lost sales.
These questions included Panel Question 67. In answering this question , the United States sought
to provide the Panel with the requested information as well as address some of the arguments
made by the European Union with respect to lost sales in its second written submission. In our
view, the entirety of the United States' answer to Panel Question 67 is not only related to the
subject matter of that question, but it also concerns a matter with respect to which the parties
have engaged and exchanged contrasting views throughout these proceedings. The
European Union's comments on the United States' answer to Panel Question 67 will represent
another moment in this proceeding when this engagement will take place, and as we have noted
above,43 there may well be others.
28. The United States introduced the Jordan Reply to Whitelaw' s Response Report in its answer to
Panel Question 92, and it was referred to in the United States' answers to Panel Questions 94,
102, 103, 105, 106 and 108. By its own words, the Jordan Reply to Whitelaw's Response Report is
intended to comment on the Whi telaw Response to Jordan Report in order to "respon[d] to and in
the light of the Panel's questions of April 23, 2013, as well as the hearing with the Parties of

41 Communication from the Panel, dated 23 April 2013.
42 United States, Non-Confidential Oral Statement, para. 105.
43 See above, para. 14.

- F-18 -

April 16-18, 2013".44 The European Union submitted the Whitelaw Response to Jordan Report as
Exhibit EU-121 (BCI and HSBI) with its second written submission.
29. All six of the Panel Questions within which the United States cited the Jordan Reply to
Whitelaw's Response Report form part of a series of questions asked to clarify certain aspects of
the parties' submissions made up until and including the substantive meeting with the parties in
relation to the United States' argument that the LA/MSF measures for the A350XWB constitute
subsidies. In our view, the matters addressed in the Jordan Reply to Whit elaw's Response Report
go directly to the issues with respect to which the Panel sought clarification in its questions. These
are the very same issues with respect to which the parties have exchanged views throughout
these proceedings. The European Union's comments on the United States' answers to these
questions, including the Jordan Reply to Whitelaw's Response Report, will represent another
moment in this proceeding when this engagement will take place, and, again, as we have noted
above,45 there may well be others.
30. As explained above, we are of the view that our evaluation of the merits of the United States'
claims in this dispute must be conducted on the basis of a full appreciation of all of the parties'
arguments and the evidence adduced in support of those arguments throughout the course of this
proceeding. We see the parties' exchange of views on the matters covered by the questions asked
on 23 April 2013 to be an important part of this process. To this end, and the light of the relatively
large number of questions posed, we allowed the parties more than four weeks to respond to our
questions, and a full three weeks to comment on each other's responses. Further, in response to
the difficulties of the European Union to review the United States' Full HSB I Appendix and certain
other US HSBI Exhibits submitted with its answers to the Panel's Questions, we extended the
deadline for the European Union to comment on the United States' answers by 14 additional days
and informed the European Union that if it con sidered that it is unable to respond fully by that
date, we would consider any justified request for a further extension. Under these circumstances,
we do not consider that the European Union's ability to make its defense has in any way been
compromised.
31. Thus, for all of the above reasons, we see no basis for agreeing with the European Union's
contention that it would be inappropriate for the Panel to cons ider the entirety of the
United States' answer to Panel Question 67 or the Jordan Reply to Whitelaw' s Response Report.
We therefore decline the European Union's request to reject these submissions.
4 ALLEGED UNAUTHORIZED ACCESS TO EUROPEAN UNION BCI/HSBI
32. The European Union notes that the United States' answers to the Panel's questions refer to a
report by Dr Chetan Sanghvi which refers in multiple places to two EU BCI and HSBI exhibits. 46
The United States notified Dr Sanghvi as a person approved to access BCI and HSBI only on
15 May 2013, while his report is dated 21 May 2013. The European Union considers i t unlikely that
Dr Sanghvi prepared the report in the six days between 15 and 21 May 2013. Moreover, the
European Union notes that it did not prepare a redacted version of the two exhibits and that
Dr Sanghvi did not access the EU HSBI location in Washingt on, D.C. after 15 May 2013. The
European Union considers that these factors demonstrate that US Approved Persons provided
Dr Sanghvi with access to BCI and HSBI prior to his designation as an Approved Person, in
violation of the BCI/HSBI Procedures. The Eu ropean Union requests that Dr Sanghvi be removed
from the Approved Persons list, and that his report be rejected. In addition, the European Union
requests that the Panel seek information from the United States regarding the identity of the
Approved Persons who disclosed EU BCI and HSBI to Dr Sanghvi, remove those persons from the
Approved Persons list, and notify the Panel in US – Large Civil Aircraft of the identity of the US
Approved Persons found to have violated the BCI/HSBI Procedures.47

44 Jordan Reply to Whitelaw's Response Report, para. 1. Exhibit US-505 (BCI/HSBI).
45 See above, para. 14.
46 Expert Declaration of Dr Chetan Sanghvi, NERA, 21 May 2013, Exhibit US-530. The two EU exhibits to
which Dr Sanghvi's report refers are Christophe Mourey, "Statement on Current Competitive Conditions in the
LCA Industry" 4 July 2012, Exhibit EU-8, which was submitted as BCI and Christophe Mourey, "Supplemental
Statement on current competitive conditions in the LCA industry", 12 December 2012, Exhibit EU-124, which
was submitted as HSBI with a BCI version.
47 European Union, Request for Interim Ruling of 28 May 2013, paras. 25-28.

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33. In its initial response, the United States characterizes the European Union's accusation that
US Approved Persons disclosed EU BCI and HSBI to Dr Sanghvi before notifying him as an
Approved Person as "completely unfounded" and "absolutely false". 48 The United States asse rts
that Dr Sanghvi did much of his work based on extensive non -BCI, and did not have access to BCI
or HSBI prior to 15 May 2013. In response to our request for a fuller explan ation of the manner in
which Dr Sanghvi's report was prepared 49, the United State s indicates that Dr Sanghvi was
retained in late April and that Outside Advisors provided him a variety of non -BCI documents,
including non -BCI information from the two exhibits referred to by the European Union, which
allowed him to make substantial progr ess before being notified as a BCI/HSBI Approved Person.
The United States reiterates that only after he was notified as an Approved Person was Dr Sanghv i
given access to EU BCI/HSBI. The United States notes that most of the "fundamental errors" in the
European Union's general approach to product market definition were apparent with no access to
EU BCI/HSBI, that Dr Sanghvi's report itself contains no BCI/HSBI and that the report did not
address flaws in NPV calculations in the EU exhibits that might have r equired more extensive
consideration of EU BCI/HSBI.50
34. We are conscious of the importance placed by both parties on the protection of sensitive
business information, as reflected in the unprecedented BCI/HSBI Procedures applicable in this
proceeding, and we take very seriously any allegations of possible violations of those Procedures.
It is for this reason that we sought an explanation from the United States regarding the manner in
which Dr Sanghvi's report was prepared. Having received that explanation, a nd in the light of the
United States' categorical denial of the European Union's allegations, we see no basis to doubt the
United States' contention that Dr Sanghvi had no access to BCI or HSBI prior to being notified by
the United States as a BCI/HSBI App roved Person. Accordingly, we deny the European Union's
request that we, inter alia, remove Dr Sanghvi as an Approved Person and reject his report.
5 CONCLUSION
35. In summary, after carefully considering the European Union's request for an interim ruling
and t he United States' response, the Panel has decided, on the basis of the foregoing
considerations, to
a. with respect to the alleged "backloading" of evidence, decline the European Union's
request to reject: (a) the Sanghvi Report (Exhibit US -530); (b) the "material" contained
in the United States' answer to Panel Question 67 that is the focus of the European
Union's objection; and (c) the Jordan Reply to Whitelaw's Response Report (Exhibit US -
505);
b. with respect to alleged unauthorized access to EU B CI/HSBI, de cline the
European Union's request that we remove Dr Sanghvi as an Approved Person and reject
his Report (Exhibit US-530).

48 United States, Reply to EU Request for Interim Ruling, 31 May 2013, para. 13.
49 Communication from the Panel, 5 June 2013, para. 27(c)(ii).
50 Communication from the United States, 10 June 2013.

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ANNEX F-4
THE EUROPEAN UNION'S REQUEST OF 14 JUNE 2012 TO EXCLUDE
CERTAIN UNTIMELY UNITED STATES' EXHIBITS
(Panel ruling issued on 28 June 2013)
1. On 10 June 2013, the United States submitted to the Panel and to the European Union by email
certain documents which it referred to as "copies of exhibits referenced in the U.S. oral
statement". On 14 June 2013, the European Union responded by email to the United States'
submission. The European Union notes that the United States purports to provide, for the first
time, the text of certain documents that it describes as exhibits to its Opening Oral Statement
delivered on 16 April, that is, 55 days earlier. The European Union asks the Panel to confirm that
the text of these documents does not form part of the record and that the text of these documents
requires no response from the European Union, as their submission did not comply with the
requirements of paragraphs 7 and 10 of the Panel's Working Procedures, paragraph 1 of the
Procedures for the Partial Opening to the Public of the Meeting of the Panel and the Panel's
communication of 12 April 2013.
2. In its 19 June 2013 response, the United States asserts that it did not realize until recently that
it had neglected to file the exhibits referenced in its Oral Statement, and that this failure was
inadvertent and due to human error. The United States notes however that the exhibits merely
demonstrate that the material cited in the Oral Statement originated from EADS or Airbus
documents, or from information already in the public domain. It further notes that certain of the
exhibits appear in the body of the Oral Statement, that the European Union has not challenged the
accuracy of the referenced material and that both the material discussed in the Oral Statement
and the exhibits themselves are uncontested. The United States contends that as the exhibits were
supplied to confirm the accuracy of uncont ested information in the Oral Statement, and as the
European Union has not been substantially prejudiced by the delay in filing copies of the exhibits,
the Panel may find that its Working Procedures do not preclude if from retaining the exhibits on
the record. Alternatively, the United States suggests that the Panel could consider that only those
portions of the exhibits that correspond to material already quoted or cited in the Oral Statement
form part of the record.
3. The Panel notes that, in its Opening Or al Statement at the meeting of the Panel with the
parties on 16 April 2013, the United States quoted from, cited to or, in two cases, partially
reproduced, seven documents, which it referred to as exhibits USA -492 to USA -498 (non-BCI) in
the provisional wr itten version of its Oral Statement that was distributed to the Panel and the
European Union at the meeting. These documents are comprised of seven slides from three
presentations prepared by EADS/Airbus employees, two pages of order/delivery information
downloaded from an Airbus website, an extract from an EADS' financial statement, pages from a
Corporate Finance textbook and a table of historical exchange rates, none of which contain BCI or
HSBI. Although the underlying documents are identified in the Ora l Statements with specific
exhibit numbers, the United States does not appear to have distributed the documents themselves
during the meeting, nor to have submitted them to the Panel and the European Union on 23 or
30 April 2013 at the time that it submitt ed the public, BCI and HSBI final written versions of its
Opening Oral Statement as delivered.
4. From these facts, it is clear to us, and we do not understand the United States to contest, that
it has not complied with the Panel's rules and procedures in reg ard to these documents. In our fax
dated 12 April 2013 regarding the conduct of our substantive meeting with the parties, we
requested the parties to provide paper copies of their prepared statements, and paragraph 10 of
our Working Procedures required the parties to submit a written version of its Oral Statement not
later than the first working day following the end of the meeting. Although the Procedures do not
specifically refer to exhibits associated with the parties' Oral Statements, we consider it imp licit
that where an Oral Statement refers to exhibits those exhibits are to be made available at the time
of the Statement. In this case, the United States did not provide the referenced documents with
the provisional written version of its Oral Statement, nor at the time the Oral Statement was

- F-21 -

delivered, nor at the time it submitted the final written versions of its Oral Statement. Indeed,
these documents were only submitted 55 days after the Panel meeting. In short, it is evident to us
that these documents were not timely submitted.
5. The question facing the Panel is thus not whether the United States has acted inconsistently
with the Panel's rules and procedures in late -submitting these documents, but what consequences
should flow from that fact. The Europe an Union would have us "confirm" that the relevant
documents do not form part of the record and that the European Union need not respond to them.
We do not doubt the authority of a panel to decline to include in the record argument or evidence
submitted by a party on the grounds that it was untimely filed or otherwise not submitted in
accordance with the panel's rules and procedures. At the same time, we do not consider that the
untimely filing of a document should necessarily result in its exclusion. 1 Rather, we believe that it
is incumbent upon us, in exercising our discretion in the management of this proceeding, to
determine an appropriate course of action after examining the behaviour in question in light of all
the circumstances, including the extent t o which the procedural error prejudices the interests of
the other party or parties to the dispute or impedes the ability of the Panel to perform an objective
assessment of the manner pursuant to Article 11 of the DSU.2
6. We recall the Appellate Body's inju nction that due process requires each party to be afforded a
meaningful opportunity to comment on the arguments and evidence adduced by the other party. 3
In this case, the European Union does not assert that the untimely filing by the United States has
impeded its ability to comment on these documents or otherwise to present its defence in this
proceeding. This may reflect the fact that the seven documents at issue were offered primarily to
confirm the source and accuracy of factual information that was inc orporated in the body of the
United States' Oral Statement itself. Indeed, for two of the documents the relevant slide was
reproduced in the United States' Oral Statement, 4 while in a third case, the relevant statements
were quoted in the United States' Or al Statement.5 It is perhaps for this reason that, although the
European Union in its answers to the Panel's Questions of 23 April 2013 addressed in detail those
parts of the United States' Oral Statement containing references to all but one of the documen ts in
question6, it never indicated to the Panel or the United States any concern that it could not identify
the documents referred to in the United States' Oral Statement.7
7. While Exhibits USA-492 to USA-498 (non-BCI) were offered primarily to confirm the source and
accuracy of information incorporated in the United States' Oral Statement, and to which the
European Union has had an opportunity to respond in its answers to the Panel's questions, the
possibility remains that the European Union might want to r espond to some aspect of these
documents themselves, and due process demands the European Union be afforded the ability to do
so. Accordingly, we will accord the European Union upon request such reasonable additional time
as it considers it might require s hould it desire to further address the content of these documents.
In the alternative, and should the European Union prefer, we note that we anticipate posing follow-

1 Appellate Body Report, Thailand – Cigarettes (Philippines), para. 148.
2 The European Union does not allege that the United States' untimely submission of Exhibits USA-492
to USA-498 (non-BCI) was intentional. The United States asserts that "it did not realize until recently that it
had neglected to file the exhibits" referenced in its Oral Statement and describes its failure to do so as
"inadvertent and due to human error". We see no reason to doubt the United States' assertions in this regard.
Accordingly, this is not a case where a sanction is required to address wilful misconduct. Rather, it involves an
oversight on the part of the United States, albeit quite a significant one.
3 Appellate Body Report, Thailand – Cigarettes (Philippines), para. 150.
4 Exhibits USA-492, USA-493.
5 Exhibit USA-494. The European Union specifically responded to the quoted language from this exhibit
in its answer to Panel Question 47, para. 146.
6 All but one of the exhibits (Exhibit US-492) related to the role of LA/MSF in the launch and subsequent
progress of the A350XWB, an issue explored by the Panel in its question 47 and to which the European Union
responded extensively in paragraphs 129-212 of its answers submitted on 22 May 2013. Exhibit US-492 relates
to whether the A380 and 7478-I are in the same product markets. Although we did not pose a question directly
related to this document, the area of product markets was explored in the Panel Questions 48-79.
7 We assume that the European Union, like the Panel, did not notice that the documents cited as
exhibits in the United States' Oral Statement, and listed in its list of exhibits, were not submitted and that this
is why it did not bring the failure of the United States to submit these exhibits to the attention of the Panel or
the United States.

- F-22 -

up questions to the parties in late August; 8 the European Union is free to address the con tent of
these documents at the same time as it responds to those questions.
8. Of course, procedural rules serve not only to ensure the right of an interested party to respond
to the case made against it, but also to ensure the efficient and prompt settleme nt of disputes.
Indeed, the Appellate Body has explained that "due process may also require a panel to take
appropriate account of the need to safeguard other interests, such as an aggrieved party's right to
have recourse to an adjudicative process in which it can seek recourse in a timely manner, and the
need for proceedings to be brought to a close. 9 In this case, however, we do not believe that the
late submission of these documents will have any significant implications for the efficient conduct
of this dispute. As noted, the Panel expects to pose follow -up questions to the parties so any
further time needed by the European Union to address the documents in question should not delay
the Panel's work. In any event, as the respondent in this case, the Euro pean Union has not
suggested that it would be prejudiced by any delay in these proceedings that might be occasioned
by the United States' late submission of the relevant documents. 10 To the contrary, as we see it,
any such delay would rather prejudice the interests of the United States as complainant.
9. We do not preclude that a panel might decide to exclude late -submitted information from the
record in a dispute, even in a case such as this one where the late submission resulted from an
oversight, did not pre judice the other party's ability to respond and did not cause undue delay in
the proceeding. Indeed, a panel might conclude that exclusion is warranted in a given case to
provide an appropriate incentive to a party to abide by deadlines, or indeed to deliv er a systemic
message about the importance of respecting procedural rules. This Panel has however been guided
by a commitment to reach a sound judgement on the merits in this dispute, through an objective
examination of the evidence and arguments put befor e it by the parties. To exclude potentially
relevant evidence put before it by a party on purely procedural grounds is not a decision to be
taken lightly and, although this is a close case, we have decided that, on balance, such action is
not required at this time.
10. Although we have decided that we will not exclude Exhibits USA -492 to USA -498 (non-BCI)
from the record in this dispute, we nevertheless would like to express our deep concern. To err is
of course human, and in a highly complex proceeding such a s this one, involving enormous
submissions, nearly a thousand exhibits and elaborate rules regarding confidential information,
some mistakes are perhaps inevitable. However, the United States has been responsible for a
larger number of procedural errors in this proceeding than can be easily justified even in a case
such as this one. In order to avoid further situations which could require the Panel to take stronger
action, we call upon the United States to take all necessary steps to ensure compliance with the
deadlines and other applicable procedures in this proceeding.
11. In conclusion, we decline the European Union's request to confirm that the text of Exhibits
USA-492 to USA -498 (non -BCI) does not form part of the record and that the text of these
documents requires no response from the European Union. In order to provide the European Union
with a meaningful opportunity to comment upon the content of the exhibits, we will accord the
European Union upon request such reasonable additional time as it considers it might require
should it desire to further address the content of these documents. In the alternative, the
European Union is free to address the content of these documents at the same time as it responds
to follow-up questions from the Panel which we expect to pose in late August.11

8 The Panel recalls that it has, on a number of occasions, informed the parties that it may need to pose
additional questions on (or even hold an additional meeting with the parties to discuss) certain factual or legal
matters arising in this dispute. The Panel announced this possibility to the parties at the end of the substantive
meeting, as well as its cover letter to the questions posed following the substantive meeting with the parties,
and its communication of 12 June 2013.
9 Appellate Body Report, Thailand – Cigarettes (Philippines), Ibid.
10 Indeed, the European Union itself has expressed concerns about a "procedural gap" between the
timetable for this proceeding and that in US – Large Civil Aircraft (Art. 21.5 - EU)(DS353), and has requested
that this Panel extend its timetable to reflect extensions in the other proceeding. Letter from the
European Union to the Panel dated 4 April 3013.
11 The Panel is conscious that delegations often take holidays during this period, and will set a timetable
for reply to its questions that takes this factor into account.

- F-23 -

ANNEX F-5
THE EUROPEAN UNION'S REQUESTS OF 28 JUNE 2013 CONCERNING THE UNITED STATES'
"CRITIQUE" TO THE COMPETITIONRX REPORT PRESENTED IN THE UNITED STATES' COMMENTS
TO THE EUROPEAN UNION'S ANSWERS TO THE PANEL'S FIRST SET OF QUESTIONS
(Panel ruling issued on 8 July 2013)
1. The Panel refers to the European Union's letter of 28 June 2013 concerning the United States'
"critique" of the Expert Report on the Financial Viability and Funding Implications of the A350XWB
Development Programme (the "Competition Rx Report", Exhibit EU-127 (BCI and HSBI)) set out in
the United States' comments on the European Union's answer to Panel Question 47. In its letter,
the European Union asks the Panel to either: (i) reject the United States' "criti que" as being
untimely filed, in the absence of any "showing of good cause"; or alternatively, (ii) afford the
European Union a meaningful opportunity to comment on the United States' "critique", were the
Panel to decide that the United States has shown "g ood cause" for its allegedly belated
submission. In such a case, the European Union submits that it should be granted an amount of
time to respond to the United States' "critique" that is equal to the t ime it has taken for the
United States to respond to the CompetitionRx Report since it was filed (i.e. 23 weeks).
2. In its response to the European Union's letter, the United States asks the Panel to reject the
entirety of the European Union's requests on the grounds that: (i) the United States' comments on
the European Union's answer to Panel Question 47 were not the first submissions made by the
United States concerning the argument advanced in the CompetitionRx Report, namely, that
LA/MSF was not critical to the 2006 launch of the A350XWB; and (ii) the United States' "critique"
of the CompetitionRx Report does not qualify as "evidence", but is rather argumentation provided
in response to an explicit request from the Panel to comment upon the European Union's answer
to Panel Question 47.
1 THE EUROPEAN UNION'S REQUEST TO REJECT THE UNITED STATES' "CRIT IQUE" OF
THE COMPETITIONRX RE PORT AS UNTIMELY FIL ED, WITHOUT A SHOWIN G OF "GOOD
CAUSE"
1.1 Introduction
3. The Panel understands the European Union's concerns about the timing of the United States'
"critique" to be not unli ke those it raised in its request for an interim ruling of 28 May 2013 with
respect to the alleged "backloading of evidence" by the United States in its answers to the Panel's
questions of 23 April 2013. 1 Thus, the Panel understands the European Union to b e of the view
that the United States was required to submit its "critique" of the CompetitionRx Report earlier in
these proceedings, and that the United States' alleged "strategic decision" not to do so has not
only prejudiced the European Union's ability to defend its interests but also the Panel's ability to
engage with the parties and therefore properly discharge its duty to make an objective assessment
of the matter. In addition, the European Union argues that the United States' "critique" of the
CompetitionRx Report amounted to "evidence", which in the light of certain statements and
observations of the Appellate Body in Thailand – Cigarettes (Philippines), cannot be accepted by
the Panel at this "late" stage in the proceedings, without any showing by t he United States of
"good cause".
4. We recall that in our Decision of 12 June 2013 addressing the European Union's "backloaded
evidence" allegations we observed that:

1 European Union, Letter of 28 June 2013, p. 3 and footnote 17 ("Accordingly, for reasons explained in
this letter and in its 28 May 2013 Interim Ruling Request17, the European Union requests that the Panel reject
the US critique as not timely filed, without any showing of good cause") (emphasis added). Footnote 17 refers
to paragraphs 11-14 of the European Union's Interim Ruling Request of 28 May 2013.

- F-24 -

"… it is a basic requirement of due process that each party be afforded a meaningful
opportunity to comment on the arguments and evidence adduced by the other party.
This due process interest must be balanced against other interests, including systemic
interests such as those reflected in Articles 3.3 and 12.2 of the DSU. {} As the
Appellate Bod y has stated, panels are best situated to determine how this balance
should be struck in any given proceeding, provided that they are vigilant in the
protection of due process and remain within the bound s of their duties under
Article 11 of the DSU.{}"2
5. With these and other important due process considerations in mind, 3 we reviewed the
substance and the relevant facts surrounding the introduction of the Sanghvi Report, the
United States' answer to Panel Question 67 and the Jordan Reply to Whitelaw's Respons e Report,
and decided to decline the European Union's specific requests to reject these United States'
submissions, inter alia, because:
"… in discharging our responsibility under Article 11 of the DSU, {it was, in our view,
appropriate} to not only put to the parties the questions asked on 23 April 2013
concerning the identification of the relevant product markets, but also to evaluate the
arguments and evidence {including the Sanghvi Report} submitted by the parties in
response to those questions."4
"… the entirety of the United States' answer to Panel Question 67 is not only related to
the subject matter of that question, but it also concerns a matter with respect to
which the parties have engaged and exchanged contrasting views throughout these
proceedings. … "5 and
"… the matters addressed in the Jordan Reply to Whitelaw's Response Report go
directly to the issues with respect to which the Panel sought clarification in its
questions. These are the very same issues with respect to which the parties have
exchanged views throughout these proceedings. …".6
6. In each of the above instances, we saw no reason to accept the European Union's allegation
that the United States' had taken a "strategic decision" to "withhold" the relevant evidence and
argument in a manner that undermined the Panel's ability to make an objective assessment of the
matter before it, or the European Union's ability to make its defense. Rather, we considered the
United States' submissions to have been made as "part of the process of engageme nt between the
parties and with the Panel that typically characterized WTO dispute settlement, whereby
arguments and evidence are explored and tested, and positions clarified and/or further developed,
with a view to informing the Panel's objective assessme nt of the matter before it". 7 For the
reasons explained below, we come to a similar conclusion with respect to the "critique" of the
CompetitionRx Report that was set out in the United States' comments on the European Union's
answer to Panel Question 47.
1.2 Relevant Facts
7. The CompetitionRx Report was prepared pursuant to a contract between Airbus SAS and
CompetitionRx, requiring the latter to "undertake a study and to assess (i) the economic and
financial viability of the Business Case for the development of the A350XWB, and (ii) the funding
implications of the development of the A350XWB for Airbus and its parent company EADS". 8 The

2 Decision of the Panel, 12 June 2013, para. 15 (footnotes omitted).
3 Decision of the Panel, 12 June 2013, paras. 11-15.
4 Decision of the Panel, 12 June 2013, para. 22.
5 Panel's Decision of 12 June 2013, para. 27. The Panel did not explain, as the European Union asserts,
that "as long as a party is expressing a view on 'a matter with respect to which the parties have engaged and
exchanged contrasting views', … it may do so at any point in the proceedings". European Union, Letter of
28 June 2013, p. 2.
6 Panel's Decision of 12 June 2013, para. 29. Again, the Panel did not explain, as the European Union
asserts, that "a party need not restrict itself to answering specific questions put to it by a panel, but may
instead offer expansive observations that speak more generally to 'the issues' implicated by a particular
question or series of questions". European Union, Letter of 28 June 2013, pp. 2-3 and footnote 6.
7 Panel's Decision of 12 June 2013, para. 17.
8 CompetitionRx Report, para. 6, Exhibit EU-127 (BCI and HSBI).

- F-25 -

European Union first submitted the CompetitionRx Report, and the A350XWB Launch Business
Case which is a principal focus of that Report,9 with its second written submission, primarily to
support its rebuttal of the United States' submissions concerning the necessity of government
financing for the "launch and market presence" of the A350XWB.10
8. The United States did not explicitly ad dress the analyses or conclusions of the CompetitionRx
Report in its Oral Statements at the substantive meeting with the parties in April 2013. However,
one aspect of the CompetitionRx Report was at least indirectly criticised by the United States in its
Oral Statements; 11 and as noted by the United States, elsewhere in its Oral Statements, the
United States continued to elaborate its views on the extent to which LA/MSF for the A350XWB
was necessary for the launch and market presence of the A350XWB, drawing inter alia from two
HSBI documents.12 The European Union specifically addressed the United States' submissions in its
Closing Oral Statement, arguing that they misrepresented the contents of the relevant documents
and/or ignored the "objective" evidence presented in its second written submission, which included
the CompetitionRx Report.13
9. The Panel decided that it wanted to explore the European Union's responses to the
United States' submissions in more detail and therefore asked the European Union in Panel
Question 47 to respond to four specific arguments made by the United States in its Confidential
Oral Statement, in the light of the two HSBI documents referred to by the United States in
paragraph 1 of its Confidential Oral Statement, namely, the A350XWB La unch Business Case
(Exhibit EU-130 (HSBI)) and the UK Government Document relating to the A350XWB (Exhibit US -
498 (HSBI)). The four arguments, as described in Panel Question 47, were: (i) "that the A350XWB
project would not have gone forward without LA/MSF "; (ii) "that Airbus launched the A350XWB
while making certain key assumptions related to LA/MSF"; (iii) "that the risks associated with the
A350XWB launch made it likely that subsidies affected Airbus's decision to proceed with the
project"; and (iv) "tha t the HSBI evidence confirms that prior LA/MSF had substantial effects on
the A350XWB project that made the A350XWB's launch - at the time that it was launched -
possible". The parties were informed at the time that the Panel asked its questions that they would
be given three weeks to comment on each other's answers, and a specific deadline was set for this
purpose.14
10. In its 27 -page response to Panel Question 47, the European Union advanced a number of
arguments intended to rebut the submissions made by the United States in its confidential Oral
Statement. In doing so, the European Union relied upon inter alia the CompetitionRx Report,
explicitly referring to it 11 times, in nine paragraphs and 14 footnotes. The European Union's
answer draws upon various anal yses undertaken, and conclusions reached, in the CompetitionRx
Report to support its view that the A350XWB programme was, contrary to the position advanced
by the United States, economically viable and would have proceeded even without any financing

9 A350XWB Launch Business Case, Exhibit EU-130 (HSBI). The European Union asserts, in response to
Panel Question 96, that it did not provide the A350XWB Launch Business Case earlier in response to the Panel's
request under Article 13 DSU for "[a]ll A350 business cases provided by Airbus or EADS to the member States
and/or any of Airbus' risk-sharing suppliers" because this document was never presented to the member
States or to Airbus' risk-sharing partners. The European Union explained that it submitted that document with
its second written submission because it was "relevant to the rebuttal of certain US assertions that the
business case would not be viable absent financing from the EU member States".
10 See, in particular, sections VI.E.3-4 of the European Union's second written submission.
11 In paragraph 9 of its Confidential Opening Oral Statement, the United States cross-referred to certain
paragraphs in the European Union's second written submission where the CompetitionRx Report was relied
upon by the European Union to support its view that the United States "has failed to demonstrate that EADS
and Airbus were unable 'to obtain adequate commercial funds' to launch the A350XWB". (European Union,
SWS, heading to section VI.E.4.a). The United States relies upon the HSBI document referred to in
paragraph 9 of its Confidential Opening Oral Statement to argue that one of the conclusions reached in the
CompetitionRx Report should be rejected. United States, Confidential Opening Oral Statement, para. 9, (HSBI)
and footnote 18. noting "e.g., EU SWS, paras. 1027, 1030, 1038".
12 United States, Non-Confidential Opening Oral Statement, paras. 81-89; and United States,
Confidential Opening Oral Statement, paras. 4-23.
13 European Union, Closing Oral Statement (BCI and HSBI), paras. 20-22.
14 The European Union was subsequently granted an additional two weeks to prepare its comments.
Decision of the Panel, 5 June 2013.

- F-26 -

from the French, German, Spanish and UK governments, both at the time of the project launch
and in [2009].15
11. Both parties submitted extensive comments on the other party's answers to the Panel's
Questions.16 In the introductory paragraph to its comments on the Eur opean Union's answer to
Panel Question 47, the United States submitted that the European Union's answer confirmed "its
failure to rebut the U.S. demonstration that LA/MSF is a genuine and substantial cause of the
launch and market presence of the A350XWB". The United State s explained that the
European Union could not, in its view, "avoid this conclusion by distorting the meaning of a UK
government document,{} downplaying the significant effects of LA/MSF to earlier models, {} touting
the badly flawed Competi tionRx Report, {} and rehashing its arguments about timing of Airbus's
request for and receipt of LA/MSF"{}.17 The United States followed this introductory paragraph with
22 pages of comments through which it responded to the European Union's answer to Panel
Question 47. These comments included ten pages devoted to setting out the reasons why the
United States' considers the CompetitionRx Report to be "badly flawed".
1.3 Evaluation by the Panel
12. In our view, it is sufficiently clear from the above exposition of t he facts surrounding the
United States' submission of its "critique" of the CompetitionRx Report that it was introduced into
these proceedings as part of the ongoing, and anticipated, 18 exchange of views between the
parties with respect to the United States ' allegations concerning the relevance of LA/MSF for the
"launch and market presence" of the A350XWB. Not only were certain specific aspects of these
allegations the subject matter of Panel Question 47, but the CompetitionRx Report was explicitly
and exten sively relied upon by the European Union to answer that question. In these
circumstances, the fact that the United States' "critique" of the CompetitionRx Report was not
presented on either of the two previous occasions available for the United States to h ave possibly
introduced it on its own initiative, namely, at the substantive meeting with the parties or in the
United States' answers to the Panel's questions, 19 does not mean that the United States should be
prevented from doing so in its comments on the European Union's answer to Panel Question 47.
To reject the United States' "critique" on this basis would, in our view, undermine the whole
purpose of the Panel's decision to pose the parties questions and afford each party an opportunity
to comment on each other's answers.
13. The European Union appears to argue, however, that the United States is not entitled to
present its "critique" of the CompetitionRx Report at this "late" stage in the proceeding, because it
qualifies as "evidence", which cannot be accep ted by the Panel without "any showing of good
cause".20 The European Union finds support for this view in certain statements and observations
made by the Appellate Body in Thailand – Cigarettes (Philippines). In particular, according to the
European Union, the Appellate Body in Thailand – Cigarettes (Philippines) noted that "'the
submission of factual evidence at the very last stage of the proceedings, that is, in a party's
comments on the other party's answers to questions by the Panel following the second substantive
meeting … should be unusual' because it is 'so late in the proceedings'". 21 Furthermore, the
European Union maintains that the Appellate Body found that for "rebuttal evidence", which the
European Union submits was "labelled a 'residual category ' of evidence" in Thailand – Cigarettes
(Philippines), "'the submitting party must show good cause' for untimely filing". 22 In our view, the
European Union's reliance on the Appellate Body's findings in Thailand – Cigarettes (Philippines) is
not only partly based on a mischaracterization of the relevant Appellate Body statements, but it is

15 European Union, Answer to Panel Question 47, paras. 136-138, 140, 153, 187-189 and 191.
16 The United States' submitted 98 pages of comments on the European Union's answers, while the
European Union submitted 283 pages of comments on the answers of the United States.
17 United States, Comments on the European Union's Answer to Panel Question 47, para. 97 (footnotes
omitted).
18 See above, para. 9.
19 We note that the Panel's questions of 23 April 2013 did not explicitly ask the United States to respond
to any particular aspect of the CompetitionRx Report.
20 European Union, Letter of 28 June 2013, pp. 2-3.
21 European Union, Letter of 28 June 2013, p. 2, citing Appellate Body Report, Thailand – Cigarettes
(Philippines), para. 154 and footnote 242.
22 European Union, Letter of 28 June 2013, p. 2, citing Appellate Body Report, Thailand – Cigarettes
(Philippines), para. 153.

- F-27 -

also misplaced given the significant differences that exist between the facts of that dispute and the
situation that is now before the Panel in this proceeding.
14. First, we note that the observations of the Appellate Body in Thailand – Cigarettes
(Philippines) that are relied upon by the European Union concerned paragraph 15 of the working
procedures of the panel in that dispute. The Appellate Body characterized this paragrap h as
allowing for the submission of " factual evidence at the very last stage of the proceedings" -
namely, in the party's comments on each other party's answers to questions after the second
substantive meeting of the panel with the parties. The European U nion does not, however, allege
that the United States has failed to comply with what is a very similar rule of procedure set out in
paragraph 15 of the Panel's Working Procedures in this dispute . Moreover, and perhaps more
importantly, the United States' " critique" of the CompetitionRx Report does not, in our view,
introduce any new factual evidence. Rather, as we read it, the United States' "critique" articulates
its arguments concerning the credibility and relevance of the CompetitionRx Report to the
particular issues that were the subject of Panel Question 47 and the European Union's answer, in
the light of evidence that has already been adduced by both parties. Likewise, the United States'
"critique" of the CompetitionRx Report was not submitted at the " very last stage" of these
proceedings, because as communicated to the parties on 28 June 2013, 23 the Panel intends to ask
the parties a series of follow -up questions towards the end of August 2013. 24 Thus, the
observations of the Appellate Body in Thailand – Cigarettes (Philippines) that are relied upon by
the European Union were made in the context of resolving an issue that does not arise in the
present circumstances.25
15. Second, and in any case, there is nothing in the Appellate Body's observations that are relied
upon by the European Union, to suggest that a panel must necessarily reject any factual evidence
that is submitted at the "very last stage" of a proceeding. While noting that such a situation
"should be unusual",26 the Appellate Body also clearly con templated the possibility that there may
be circumstances when a panel may decide to accept such factual evidence even without offering
the other party an opportunity to comment:
"As set out above, due process generally demands that each party be afforded a
meaningful opportunity to comment on evidence adduced by the other party. At the
same time, a number of different considerations will need to be factored into a panel's
effort to protect due process in a particular dispute, and these may include the nee d
for a panel, in pursuing prompt resolution of the dispute, to exercise control over the
proceedings in order to bring an end to the back and forth exchange of competing
evidence by the parties."27
16. Thus, after examining a number of "considerations that {were} germane" to its assessment of
Thailand's Article 11 DSU claim, the Appellate Body found that the panel in Thailand – Cigarettes
(Philippines) had not infringed any principles of due process when it accepted Exhibit PHL -289,
submitted by the Philippines with its comments on Thailand's answers to the panel's questions
after the second substantive meeting, without offering Thailand a meaningful opportunity to
comment on the contents of that exhibit.28

23 The Panel appreciates that this communication was transmitted to the parties only after the
European Union's letter of 28 June 2013 was received.
24 The Panel recalls that, prior to its communication of 28 June 2013, it had, on a number of occasions,
informed the parties that it may need to pose additional questions on (or even hold an additional meeting with
the parties to discuss) certain factual or legal matters arising in this dispute. The Panel announced this
possibility to the parties at the end of the substantive meeting, as well as in its cover letter to the questions
posed following the substantive meeting with the parties, and its communication of 12 June 2013.
25 Indeed, as we see it, the issue before the Appellate Body in Thailand – Cigarettes (Philippines) was
significantly different to the one that is before us in this proceeding, as it related to the extent to which the
panel in that dispute was entitled to accept a piece of new factual evidence as part of the Philippines'
comments to Thailand's answers to the panel's questions after the second substantive meeting of the parties
without giving Thailand an opportunity to comment upon this new factual evidence. Appellate Body Report,
Thailand – Cigarettes (Philippines), paras. 141-146.
26 Appellate Body Report, Thailand – Cigarettes (Philippines), footnote 242.
27 Appellate Body Report, Thailand – Cigarettes (Philippines), para. 155.
28 Appellate Body Report, Thailand – Cigarettes (Philippines), paras. 156-160.

- F-28 -

17. Finally, and contrary to what is argued by the European Union, the Appellate Body in Thailand
– Cigarettes (Philippines) did not qualify "rebuttal evidence" as a "residual category" of evidence
that can only be accepted "late in the proceedings" or "at the very last stage" of a proceeding if
"good cause" is sh own. Rather, in reviewing the rules for submitting factual evidence found in
paragraph 15 of the panel's working procedures in that dispute, the Appellate Body explained that
"rebuttal evidence" fell within the scope of the first category of evidence ident ified in those
procedures, and that this category encompassed "evidence that is submitted no later than the first
substantive meeting, as well as evidence that, albeit submitted at a later stage, is necessary for
purposes of rebuttal, answers to questions, or comments on answers to questions".29 The "residual
category" of evidence identified by the Appellate Body did not include "rebuttal evidence" because
the former comprised "evidence that does not fall within the scope of the first sentence" of the
panel's working procedures. It was only with respect to the introduction of this "second category"
of evidence that the Appellate Body found there was a requirement in the panel's working
procedures to show "good cause". Thus, even assuming that the United State s' "critique" of the
CompetitionRx Report could be qualified as "rebuttal evidence", the Appellate Body's interpretation
of the panel's working procedures in Thailand – Cigarettes (Philippines) does not stand for the
proposition that the United States shou ld have shown "good cause" in order to introduce that
"critique" at the time that it commented on the European Union's answer to Panel Question 47.
18. Thus, for all of the foregoing reasons, we decline the European Union's request to reject the
United States' "critique" of the CompetitionRx Report on the grounds that it was untimely filed,
without any showing of "good cause".
2 THE EUROPEAN UNION'S REQUEST TO BE PROVID ED WITH A "MEANINGFU L
OPPORTUNITY" (23 WEEKS) TO COMMENT ON THE UNITED STATES' "CRITIQUE"
19. The Panel recalls that it has already informed the parties that it will pose a series of follow -up
questions towards the end of August 2013. With these questions, both parties will be afforded
further opportunities to make submissions with respect to each oth er's views on a number of
issues on which the Panel desires further clarification. This will include the extent to which LA/MSF
was necessary for the "launch and market presence" of the A350XWB. The parties will also be
given an opportunity to make any com ments on each other's answers to the Panel's questions.
Thus, while the Panel does not agree with the European Union's contention that, in order to secure
its due process rights, it must be given the same amount of time to respond to the United States'
"critique" of the CompetitionRx Report as it took the United States to make that "critique", the
Panel will provide the European Union, through the questions and answers process that is
expected to begin towards the end of August, ample opportunity and time t o respond to the
United States' "critique" of the CompetitionRx Report.
3 CONCLUSION
20. In summary, after carefully considering the European Union's request to reject the
United States' "critique" of the CompetitionRx Report, and the United States' response, th e Panel
has decided, on the basis of the foregoing considerations, to:
a. decline the European Union's request to reject the United States' "critique" of the
CompetitionRx Report; and
b. decline the European Union's request to be afforded exactly 23 weeks to re spond to the
United States' "critique" of the CompetitionRx Report. Nevertheless, the Panel notes that
the European Union will be provided with ample opportunity and time to respond to the
United States' "critique" of the CompetitionRx Report in the questi ons and answers
process that it has previously communicated to the parties will begin towards the end of
August 2013.

29 Appellate Body Report, Thailand – Cigarettes (Philippines), para. 153 (emphasis added).

- F-29 -

ANNEX F-6
THE EUROPEAN UNION'S REQUESTS OF 2, 4 AND 11 SEPTEMBER 2013 CONCERNING
THE ADOPTION OF ADDITIONAL INFORMATION CONFIDENTIALITY PROCEDURES
FOR THE PURPOSE OF RESPONDING TO PANEL QUESTION 126
(Panel ruling issued on 16 September 2013)
1. The Panel refers to the European Union's communications of 2, 4 and 11 September 2013
concerning the information requested in Panel Question 126, a nd the United States' response of
4 September 2013. In its communications, the European Union asked the Panel to adopt more
stringent confidentiality rules with respect to the information sought by the Panel in Question 126.
The United States' objected to the European Union's request.
2. Before turning to address the merits of the European Union's request, the Panel would like to
firstly recall the particular context which led it to ask the European Union for the information
identified in Question 126. The red acted information Question 126 asks the European Union to
disclose is found in two Exhibits that were introduced into this proceeding by the European Union
for the specific purpose of rebutting the United States' submission that the A350XWB programme
would not have been viable without LA/MSF. The United States has on a number of occasions
raised the redactions of information from the HSBI versions of these Exhibits with the Panel,
complaining that some (but not all) have hampered its ability t o fully respon d to the
European Union's arguments. The United States has also suggested that the same redactions could
hinder the Panel's own task of making an objective assessment of the matter. Panel
Question 96(c) asked the European Union to explain why it had redact ed certain information from
one of the two Exhibits, the A350XWB Launch Business Case (Exhibit EU -130 (HSBI)). After
carefully considering the European Union's response, as well as the United States' comments on
this and other European Union answers to que stions, the Panel decided that in order for it to
conduct an objective assessment of the matter, it would need to review and consider the
information requested in Panel Question 126.
3. The Panel does not understand the parties to disagree with the notion that where a party
submits evidence to substantiate an argument it is making in WTO dispute settlement proceedings,
it is up to that party to disclose all of the information necessary for a panel to make an objective
assessment of the probative value of th e evidence it relies upon. A party's submission of evidence
must also take into account the due process rights of the opposing party. As in the original
proceedings, both parties in this dispute have, to differing degrees, redacted certain information
from parts of the evidence presented to substantiate their respective arguments. The parties have
explained their actions by inter alia referring to the extraordinarily commercially sensitive nature of
the information at issue. The Panel recalls, however, that it was to address precisely these types of
concerns that it adopted, on request and after consultation with the parties, the existing BCI/HSBI
Procedures. These procedures, which represent the most stringent and far reaching confidentiality
rules ever applied in the history of WTO dispute settlement, were specifically designed to facilitate
the parties' abilities to submit commercially sensitive information in these proceedings, including in
response to all Panel requests for information considered necessa ry to the task of conducting an
objective assessment of the claims and issues before it.
4. The Panel appreciates the seriousness of the concerns raised by the European Union with
respect to the information requested in Panel Question 126. The Panel also rec ognizes the efforts
the European Union has undertaken since its communication of 2 September 2013 to endeavour to
respond to the entirety of the Panel's information request. The Pane l understands from the
European Union's letter of 11 September 2013 that d espite its ear lier reservations, the
European Union is now ready to provide all of the requested information, with the exception of
certain recurring cost and revenue data, under the protection of the existing BCI/HSBI Procedures.
Given the exceptional nature of the European Union's acute sensitivities to disclosing the specified
recurring cost and revenue data, the Panel has decided to grant the European Union's request to
exclude this information, as identified in its letter of 11 September 2013, from its answer to Panel
Question 126. The Panel does so, however, without prejudice to further consideration of this

- F-30 -

matter at a later stage in these proceedings, should the Panel conclude that the information not
provided by the European Union is necessary for it to complete its work.
5. On this basis, the Panel requests that the European Union provide all of the information
requested in Question 126 with the exception of the following:
 Revenue data from the CompetitionRx Report (Exhibit EU -127 (HSBI)), in particul ar,
paragraph 139; figure 4; tables 16 and 17; and the tables in Annexes C and D; and
 Recurring cost data from slide 59 of the A350XWB Launch Business Case (Exhibit EU -
130 (HSBI)); as well as from paragraph 193; tables 12, 15, 16, 17; figures 6 and 7; and
the tables in Annex D of the CompetitionRx Report (Exhibit EU-127 (HSBI)).
6. The Panel understands that the European Union is in a position to submit this information at
the same time as its answers to all other Panel Questions, i.e. by 20 September 2013.

- F-31 -

ANNEX F-7
THE EUROPEAN UNION'S REQUEST OF 24 MARCH 2014 CONCERNING THE PANEL'S
DECISION TO POSE SIX ADDITIONAL WRITTEN QUESTIONS TO THE PARTIES
(Panel ruling issued on 31 March 2014)
The Panel refers to the European Union's letter of 24 March 2014, and the United States' reply of
26 March 2014, concerning its intention to pose six additional questions to the parties, including a
number of questions concerning the alleged subsidization of the A350XWB.
The Panel has carefully considered the parties' submis sions, and for the reasons explained in
following pages , has decided to maintain its request. Given the relat ively small number of
questions1, the Panel had originally envisaged to invite the parties to submit their answers by close
of business on Tuesday, 15 April 2014 , subject to any reasonable and justified request for an
extension. Now that the questions have been provided, and in the light of the European Union's
stated resource constraints, the parties are requested to confirm by close of business on
Wednesday, 2 April 2014 , whether it would be possible to meet the 15 April 2014 deadline.
Should either party consider that it will be unable to provide the requested information and/or
explanations within this time-limit, it should inform the Panel and re quest an extension, proposing
an alternative date. The parties will be invited to submit any comments they may have on each
other's answers to the Panel's questions on a date to be set by the Panel in the light of the
responses submitted by the parties on 2 April 2014.

1 Of the six additional questions, three are posed only to the European Union, two only to the
United States, and one question is posed to both parties.

- F-32 -

1 THE PANEL'S DECISION TO POSE ADDITIONAL QUESTIONS
1. In its letter of 24 March 2014, the European Union requests that the Panel reconsider its
decision to ask additional questions with respect to the "alleged subsidization of the A350XWB".
According to the European Union, "the time is now long past for this debate to come to an end"; 2
and any request on the part of the Panel for the parties to answer additional questions on this
issue would "at this juncture risk{} further breaching enumerated l imits on the Panel's use of its
interrogative powers, including notably, to make good either Party's failure to articulate and
substantiate its case".3
2. The United States opposes the European Union's request. While the United States shares the
European Union's view that the Panel has afforded the parties "ample opportunity" to address the
issues presented in this dispute, it does not believe that this precludes the possibility that the
Panel may need additional clarification of the parties' views or the rel evant facts before it.4 For the
United States, the Panel is entitled to ask additional questions provided that it fulfils its
responsibilities under the DSU, while minimizing undue delay in the proceedings.5
3. We recognize that the parties in a typical Arti cle 21.5 dispute would probably not expect to
receive a set of questions from the panel 11 months after the one and only substantive meeting.
We are fully conscious of the 90 day deadline for a compliance panel to circulate its report, 6 and
that the prompt settlement of disputes is essential to the effective functioning of the WTO and the
dispute settlement mechanism.7 However, as the parties are well aware, the present dispute is not
an ordinary Article 21.5 proceeding, a fact that is reflected in inter alia the parties' decisions to
designate over 150 government representatives and outside advisors as Approved Persons, 8 to file
first and second written submissions totalling 1470 pages (not to mention scores of lesser
submissions on a wide range of matters), to submit numerous expert reports and to put before the
Panel some 1100 exhibits. 9 Indeed, on more than one occasion we have explained that the
complex issues and voluminous arguments and evidence submitted in these proceedings create
particular challenges for its work given the one -meeting format of compliance disputes. It should
therefore come as no surprise that given the limited resources available in the Secretariat to assist
the Panel carry out its mandate, the fine details of a number of matters at issue in this dispute
have only been clearly identified and fully considered by the Panel relatively recently, much later
than would otherwise be the case in an average Article 21.5 proceeding.
4. It was with these particular challenges in mind that we info rmed the parties on each previous
occasion it decided to pose written questions that: (i) it could not "exclude that as it continue{d}
to deliberate on the merits of the United States' claims, it may find it necessary to pose further
questions on factual o r legal issues"; and (ii) that it would "ensure that were any such further
questions to be asked, the parties [would] be notified in advance and given sufficient time to
respond."10 Consistent with this stated approach, our communication of 20 March 2014 ga ve the
parties 11 days' notice of our intention to pose six additional questions to the parties, a "number"
of which may require the parties to call upon the experts they have thus far used to make
submissions on the alleged subsidization of the A350XWB. A ll six of the additional questions were
prompted by our ongoing consideration of the parties' arguments and evidence, which has led us
to conclude that there are a number of important matters that need to be clarified and/or further
elaborated in order for it to conduct an objective assessment of the matter. However, for the
European Union, the Panel would risk doing precisely the opposite by deciding to ask any

2 European Union's Letter to the Panel of 24 March 2014, p. 3.
3 European Union's Letter to the Panel of 24 March 2014, p. 3.
4 United States Response of 26 March 2014 to the European Union's Letter of 24 March 2014, p. 1.
5 United States Response of 26 March 2014 to the European Union's Letter of 24 March 2014, p. 2.
6 Article 21.5, DSU.
7 Article 3.3, DSU.
8 European Union Approved Persons List of 17 September 2013 (41 government representatives / 36
outside advisers); United States Approved Persons Lists of 7 May 2013 (33 government representatives / 47
outside advisers).
9 The parties' written submissions in this dispute have also included answers, and comments on each
other's answers, to 160 questions (often with multiple sub-parts) posed by the Panel.
10 See cover note to the Panel's Questions to the Parties of 23 April and 23 August 2013. The Panel
made a similar statement at the end of the substantive meeting with the parties, as well as in its
communication of 12 June 2013 concerning the European Union's request for an interim ruling of 28 May 2013,
para. 14.

- F-33 -

additional questions with respect to the alleged subsidization of the A350XWB at this stage of t he
proceeding.11 In our view, there is no basis to the European Union's concerns.
5. We are aware of no rule that, as a general matter, would prevent a panel from posing written
questions to the parties in a dispute at any stage of a proceeding. Indeed, as we have previously
noted,12 it is well established that "a panel is vested with ample and extensive discretionary
authority to determine when it needs information to resolve a dispute and what information it
needs. A panel may need such information before or after a complaining or a responding member
has established its complaint or defence on a prima facie basis."13 Moreover, the Appellate Body
has explained that "panels are entitled to ask questions of the parties that they deem relevant to
the consideration of issues before them".14 It follows that a panel's discretion to pose questions to
the parties must be first and foremost guided by its obligation to conduct an objective assessment
of the matter. Obviously, any decision to exercise this discretion relative ly late in a proceeding
must also take account of the need to settle disputes in a timely manner, particularly in the
context of Article 21.5 proceedings. However, the objective of achieving a prompt settlement of
disputes cannot alone dictate when a panel is entitled to request the parties to provide information
and/or explanations that are considered necessary to perform its function. Thus, to accept that the
Panel in this compliance dispute cannot ask the parties to answer six additional questions simply
because 22 months have passed since the United States filed its first written submission (in a
proceeding that is undeniably one of the most legally complex and factually intensive Article 21.5
disputes in the history of the WTO dispute settlement mechani sm) would artificially and arbitrarily
constrain the Panel's ability to discharge its duty and thereby bring it into conflict with the
standards of the DSU. As we have previously explained:
"The 'objective assessment of the matter' that a panel is called u pon to perform under
Article 11 of the DSU requires it to carefully and independently scrutinize the parties'
arguments and any evidence submitted in support of those arguments, with a view to
clarifying their meaning and exploring their implications for t he particular claims being
made. Consistent with this obligation, and in the light of the extremely voluminous
and complex issues that have been raised in this dispute, we believe that our
evaluation of the merits of the United States' claims must be condu cted on the basis
of a full appreciation of all of the parties' arguments and the evidence adduced in
support of those arguments throughout the course of this proceeding."15
6. Thus, contrary to the European Union's contentions, we see no obstacle to or risk in posing any
number of additional questions to the parties concerning the alleged subsidization of the A350XWB
at any stage in this proceeding, provided that we consider the information sought by any such
questions to be necessary to our task of making an objective assessment of the United States'
claims. Rather than tainting the neutrality of our findings in this dispute, the information and/or
explanations that are requested in the additional questions we have asked the parties will, in our
view, only serve to ensure that the standards of Article 11 of the DSU are respected.
7. Finally, we note that of the five additional questions asked with respect to the alleged
subsidization of the A350XWB, it became necessary to pose three of them because the
methodologies and underlying data used by the European Union to calculate the IRRs and
Macaulay durations of the challenged LA/MSF contracts yet to be fully explained and/or completely
disclosed. Had such explanations and data been provided when the relevant calcul ations were first
submitted,1617 or when the Panel explicitly requested them,18 the Panel might not have had to pose
some of the questions it now seeks to have answered.

11 We note that the European Union's objection to the Panel's intention to ask additional questions is
limited to the "number" of questions the Panel stated in its fax of 20 March 2014 it wanted to ask in respect of
the alleged subsidization of the A350XWB. The European Union does not take issue with the Panel's intention
to ask questions concerning any other matter at this stage of the proceeding.
12 See Panel's communication of 12 June 2013 concerning the European Union's request for an interim
ruling of 28 May 2013, para. 14.
13 Appellate Body Report, Canada – Aircraft, para. 192 (underline added).
14 Appellate Body Report, Thailand – H-Beams, para. 135.
15 Panel's communication of 12 June 2013 concerning the European Union's request for an interim ruling
16 The first presentation of the final numerical values of the IRRs relied upon by the European Union was
made in its second written submission on 15 January 2013 (table at para. 300) and the accompanying

- F-34 -

2 DEADLINE TO RESPOND TO THE PANEL'S ADDITIONAL QUESTIONS
8. In its letter of 24 March 2014, t he European Union revealed that were the Panel to decide to
pose the additional questions, the European Union would be "unable to marshall the expert
resources necessary to address questions on this issue" between 12 April and 4 May 2014, "in light
of long-standing professional and personal commitments." The European Union requests that the
Panel "take this factor, as well as the demands of due process, into account in considering how to
proceed".19
9. The United States submits that the unavailability of certa in " expert resources" from
12 April 2014 to 5 May 2014 does not warrant any special accommodations for responding to
questions. The United States notes that these dates would leave "almost two working weeks" to
answer the Panel's questions. According to the United States, this amount of time would be in "line
with what the Panel has provided in previous rounds of questions, which included many more than
six questions". Furthermore, the United States suggests that "given the late stage of the
proceeding and the importance of resolving the dispute promptly, it would not appear to be
necessary to provide for comments to answers to questions".20
10. In providing the parties with advance notice on 20 March 2014 of its intention to ask
additional questions, the Panel h ad wanted to give the parties a reasonable period of time to
organize their resources in order to be in a position to fully respond to its questions. Given that
almost six months have passed since the parties' last submissions in this dispute, we can certa inly
appreciate that it may not be easy for the parties to assemble all of the relevant resources and
expertise in sufficient time. However, bearing in mind that the European Union's unidentified
"expert resource{}" constraints were expressed without havin g seen the relevant questions, and
that the Panel had in any case intended to invite the parties to submit their answers by close of
business on Tuesday, 15 April 2014 , subject to any reasonable and justified request for an
extension, the parties are requested to review the questions that are now before them and confirm
by close of business on Wednesday 2 April 2014 , whether it w ould be possible to meet the
15 April 2014 deadline. Should either party consider that it will be unable to provide the requested
information and/or explanations within this time -limit, it should inform the Panel and request an
extension, proposing an alternative date.
11. We do not agree with the United States when it suggests that "it would not appear to be
necessary to provide for co mments to answers to questions". In our view, the United States'
suggestion would undermine both parties' fundamental due process right to an opportunity to
comment on any submissions made by the other. Thus, the parties will be invited to submit any
comments they may have on each other's answers to the Panel's questions on a date to be set by
the Panel in the light of the responses the parties will submit on 2 April 2014.

Whitelaw Response to Jordan Report (table at para. 12), Exhibit EU-121(BCI). The underlying data and specific
methodology used to derive the IRRs was not disclosed. It was only eight months later, in its answers to the
Panel's second set of questions submitted on 20 September 2013, that the European Union revealed part of the
data used to derive the IRRs in the Further Report by Professor Whitelaw, Exhibit EU-421 (HSBI).
17 The European Union's Macaulay duration calculations were first submitted in Exhibit EU-380 (HSBI)
on 22 May 2013, as part of the European Union's Answer to Panel Question 92. The first explanation and
justification provided by Professor Whitelaw for the use of these calculations was provided in Exhibit EU-396
(BCI/HSBI) on 25 June 2013, as part of the European Union's Comments on the United States' Answers to the
first set of Questions. Professor Whitelaw's explanation did not, however, fully disclose the methodology used
to derive the calculations with respect to each of the relevant LA/MSF contracts.
18 See, in particular, Panel Question 132 to the European Union, which read: "Please explain
Professor Whitelaw's calculations of the IRRs of the A350XWB LA/MSF Agreements. Please provide all
underlying data for these calculations, showing the figures and describing the methodology used with respect
to all contracts, including amendments, as well as anticipated cash flows to and from the member States and
any assumptions with regards to revenues, prices and/or royalties (e.g. were list prices used or
actual/anticipated negotiated prices?). Please explain the extent to which the methodology used by
Professor Whitelaw differs or is similar to that used by the European Union to calculate the IRRs of the LA/MSF
Agreements in the original proceeding."
19 European Union's Letter to the Panel of 24 March 2014, p. 4.
20 United States Response of 26 March 2014 to the European Union's Letter of 24 March 2014, p. 2.

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ANNEX G
THE EUROPEAN UNION'S COMPLIANCE COMMUNICATION OF 1 DECEMBER 2011
Contents Page
Annex G-1 The European Union's compliance communication of 1 December 2011
(WT/DS316/17)
G-2

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ANNEX G-1
THE EUROPEAN UNION'S COMPLIANCE COMMUNICATION OF 1 DECEMBER 2011
(WT/DS316/17)
1. The European Union refers to the recommendations and rulings of the WTO Dispute Settlement
Body (DSB) with respect to the dispute European Communities and Certain Member States –
Measures Affecting Trade in Large Civil Aircraft (WT/DS316). The European Union would like to
inform the DSB that it has taken appropriate steps to bring its measures fully into conformity with
its WTO obligations, and to comply with the DSB's recommendations and rulings.
2. In considering appropriate steps to bring its measures into conformity with its WTO obligations,
the European Union took note of all elements of the DSB's recommendations and rulings,
including, in particular, the Appellate Body's guidance on the way in which subsidies and adverse
effects expire, dissipate, terminate or are o therwise removed or withdrawn. In undertaking this
review, we consulted, among o thers, independent experts in: financial economics; investor
behaviour; financial and cost auditing, accounting and controlling; product engineering; and Large
Civil Aircraft (LCA) fleet management. We have also clo sely monitored and assessed LCA product
and market developments in the months and years following the period covered by the Panel's
review.
3. As a result of this review, the European Union has adopted a course of action that addresses all
forms of adverse ef fects, all categories of subsidies, and all models of Airbus aircraft covered by
the DSB's recommendations and rulings.
4. Specifically, in bringing its measures into conformity with its WTO obligations, the European
Union has addressed all categories of subsidy covered by the DSB's recommendations and rulings:
Member State Financing (MSF) loans, capital contributions, infrastructure support and regional aid.
Amongst others, the European Union has secured repayment of MSF loans and terminated MSF
agreements, increased fees and lease payments on infrastructure support to accord with market
principles, and ensured that capital contributions and regional aid subsidies have, in the Appellate
Body's words, "come to an end" and are no longer capable of causing adverse effects. Additionally,
the course of action adopted by the European Union affects Airbus' A300, A310, A320, A330, A340
and A380 aircraft, as well as derivatives thereof, as implicated by the DSB's recommendations and
rulings. Finally, as a result of thes e steps and other intervening market events, the European
Union has addressed the forms of adverse effects covered by the DSB's rulings. Information
concerning the steps that have been taken by the European Union is provided in the attached list.
5. In short, by having taken appropriate steps to bring our measures into conformity with our
WTO obligations, as required by Article 7.8 of the SCM Agreement and Article 19.1 of the DSU, the
European Union has ensured full implementation of the DSB's recommendations and rulings.

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1. Termination of French MSF agreement for A300B;
2. Termination of French MSF agreement for A300B2/B4;
3. Termination of French MSF agreement for A300-600;
4. Termination of German MSF agreement for A300B;
5. Termination of German MSF agreement for A300B2/B4;
6. Termination of German MSF agreement for A300-600;
7. Termination of Spanish MSF agreement for A300B;
8. Termination of Spanish MSF agreement for A300B2/B4;
9. Termination of Spanish MSF agreement for A300-600;
10. Termination of French MSF agreement for A310;
11. Termination of French MSF agreement for A310-300;
12. Termination of German MSF agreement for A310;
13. Termination of German MSF agreement for A310-300;
14. Termination of Spanish MSF agreement for A310;
15. Termination of Spanish MSF agreement for A310-300;
16. Termination of French MSF agreements for A320;
17. Termination of German MSF agreement for A320;
18. Termination of Spanish MSF agreement for A320;
19. Termination of French MSF agreement for A330/A340 Basic;
20. Termination of German MSF agreement for A330/A340 Basic;
21. Termination of Spanish MSF agreement for A330/A340 Basic;
22. Termination of French MSF agreement for A330-200;
23. Termination of French MSF agreement for A340-500/600;
24. Termination of Spanish MSF agreement for A340-500/600;
25. Payment by Airbus, other than on deliveries under previously existing contractual terms, with
respect to outstanding MSF obligations in the amount of approximately EUR 1,704,775,000;
26. Bringing "to an end" 1 the 1987, 1988, 1992 and 1994 French capital contributions into
Aérospatiale; the 1 989 capital contribution by Kreditanstalt für Wiederaufbau ("KfW") into
Deutsche Airbus GmbH and the subsequent 1992 transfer of KfW's shares; the French MSF
agreements for the A300B, A300B2/B4, A300 -600, A310, A310 -300, A320, A330/A340 Basic,
A330-200 and A340-500/600; the German MSF agreements for the A300B, A300B2/B4, A300-600,
A310, A310-300, A320 and A330/A340; the Spanish MSF agreements for the A300B, A300B2/B4,

1 Appellate Body Report, EC – Aircraft, para. 709.

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A300-600, A310, A310-300, A320, A330/A340 Basic and A340 -500/600; the UK MSF agreements
for the A320 and A330/A340 Basic; the regional development grant for an A380 -related facility of
Airbus Deutschland GmbH (now Premium AEROTEC GmbH) in Nordenham, Germany; and, the
regional development grants for largely A380 -related facilities of EADS/CASA i n Tablada and
Puerto de Santa Maria, Spain, and of Airbus España, S.L. (now Airbus Operations, S.L.) in Illescas
and Puerto Real, Spain;
27. Isolation of Spanish regional development grants to the EADS/CASA facility at La
Rinconada/San Pablo, Spain, from use for LCA purposes;
28. Amendment of take-off and landing fee schedule for use of the runway extensions at Bremen
Airport;
29. Amendment of the lease agreement between Airbus Deutschland GmbH and
Projektierungsgesellschaft Finkenwerder mbH & Co. KG for an A380 -related Airbus Deutschland
GmbH facility in Hamburg Finkenwerder;
30. Subsequent share transactions and cash extractions involving subsidy recipients;
31. Termination of the A300 LCA programme;
32. Termination of the A310 LCA programme;
33. Termination of the A340 LCA programme;
34. Completed deliveries of relevant LCA to markets for which displacement was found and
completed performance of sales contracts for A319s with easyJet, A320s with Air Berlin, A319s and
A320s with Czech Airlines, A320s with Air Asia, A340 -600s with Iberia, A340-300s and A340-600s
with South African Airways, A340-500s and A340-600s with Thai Airways International, A380s with
Emirates Airlines, A380s with Singapore Airlines, and A380s with Qantas;
35. Non-subsidised subsequent investments in Airbus' A320 and A330 LCA programmes;2
36. Attenuation, through the actions or steps taken with respect to the subsidies and through
further intervening causes, of any causal link to the point that it no longer constitutes "'a genuine
and substantial relationship of cause and effe ct' between the subsidies and the alleged market
phenomenon".3