EUROPEAN COMMUNITIES AND CERTAIN MEMBER STATES – MEASURES AFFECTING TRADE IN LARGE CIVIL AIRCRAFT
Document: Recourse to Article 21.5 of the DSU by the United States Request for the Establishment of a Panel
Date: 3 April 2012
Document codes: WT/DS316/23
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

Request for the Establishment of a Panel

 The following communication, dated 30 Marc h 2012, from the delegation of the United States
to the Chairperson of the Dispute Settlement Body, is circulated pursuant to Article 21.5 of the DSU.

Countervailing Measures ("SCM Agreement") that caused adverse effects to U.S. interests within the
meaning of Articles 5(c) and 6.3(a), (b), and (c) of that Agreement:

 grants of launch aid/member State fina ncing ("LA/MSF") by the European Union
("EU") member state governments of Fr ance, Germany, Spain, and the United
Kingdom to Airbus for the A300, A 310, A320, A330, A340, A330-200, A340-
500/600, and A380;
 the provision of the Mühlenberger Loch site and the lengthened Bremen Airport
Runway;
 grants by authorities in Germany and Spain for the construction of manufacturing and
assembly facilities in Nordenham, German y, and Sevilla, La Rinconada, Toledo,
Puerto de Santa Maria, and Puerto Real, Spain, and by the government of Andalusia
and Castilla-La Mancha to Airbus in Puerto Real, Sevilla, and Illescas (Toledo);
 the 1989 acquisition by Kreditanstalt für Wiederaufbau ("KfW") of a 20 percent
equity interest in Deutsche Airbus and th e 1992 transfer by KfW of its 100 percent
equity interest in Deutsche Airbus to Messerschmitt-Bölkow-Blohm GmbH
("MBB"); and
 the 1987, 1988, 1992, and 1994 equity infusions to Aérospatiale.
The DSB recommended that the EU and certain member States bring their WTO-inconsistent
measures into compliance with their obligations under the SCM Agreement.

2. On December 1, 2011, the EU transmitte d a document ("EU Notification") to the
United States and the DSB claiming that the EU had brought its measures fully into conformity with
the DSB recommendations and rulings. The EU notifi cation included a list of 36 "appropriate steps"
taken by the EU to bring its measures into confor mity with the EU's WTO obligations. Upon review
of the notification, the United States did not ag ree with the EU's position that the EU had fully
complied with the DSB recommendations and rulings . Accordingly, the United States requested
consultations on December 9, 2011.
1 The United States and the EU held consultations on
January 13, 2012. The consultations failed to resolve the dispute.
3. Article 7.8 of the SCM Agreement provides that a Member found to maintain measures
inconsistent with Article 5(c) a nd 6.3 of the SCM Agreement "shall ta ke appropriate steps to remove
the adverse effects or shall withdraw the subsidy. " The United States considers that the EU has done
neither of these with regard to the measures listed in paragraph 1. As there is "disagreement as to the
existence or consistency with a covered agr eement of measures taken to comply with the
recommendations and rulings" of the DSB, the United States respectfully seeks recourse to
Article 21.5 of the Understanding on Rules and Procedures Go verning the Settlement of Disputes
("DSU") in this matter.
2
4. As explained in further detail below, th e United States specifically requests that the
Article 21.5 panel consider the following matters. W ith respect to the measures the EU has identified
in the EU Notification as the measures taken to co mply with the recommendations and rulings of the
DSB for purposes of Article 21.5 of the DSU, the United States considers that (i) these measures are
insufficient to remove the adverse effects or withdraw the subsidies, and (ii) certain of these measures
taken to comply introduce new in consistencies with the SCM Agre ement. In addition, French,
German, Spanish, and UK LA/MSF for the A350XWB (i) are measures closely related to the
measures the EU has identified as taken to comply and to the EU measures the DSB found to be
inconsistent with the SCM Agreement and (ii) repl ace or continue the LA/MSF for twin-aisle aircraft
covered by the recommendations and rulings of th e DSB. The United States considers these LA/MSF
measures for the A350XWB to be inconsistent with the SCM Agreement.
5. The EU Notification, as well as other availa ble information, indicates that, despite the
recommendations and rulings of the DSB, the EU and certain member States have failed to withdraw
subsidies with respect to the production and develo pment of large civil aircraft, which subsidies
continue to cause adverse effects, and have conf erred new specific subsidies that cause adverse
effects. These include:
(a) forgiveness of outstanding obligations to the Governments of France, Germany,
Spain, and the United Kingdom under LA/MSF agreements for the A300B,
A300B2/B4, A300-600, A310, A310-300, A320, A330/A340 Basic, A330-200, and
A340-500/600;
(b) termination of French, German, and Spanish LA/MSF agreements for the A300B,
A300B2/B4, A300-600, A310, A310-300, A320, A330/A340 Basic, A330-200, and
A340-500/600 on non-commercial terms or in a manner that did not withdraw the
subsidy;

1 WT/DS316/19. The United States considered consultations could be useful, but made its request
without prejudice to its view that consultations are not required under Article 21.5 of the DSU.
2 See also item 1 "Agreed Procedures under Articles 21 and 22 of the Dispute Settlement
Understanding and Article 7 of the SCM Agreement," dated 12 January 2012, circulated in WT/DS316/21 ("The
parties note that the United States considers that the situation described in Article 21.5 of the DSU exists").

(c) French, German, Spanish, and UK LA/M SF for single-aisle large civil aircraft,
including the A320 and its derivatives;
(d) French, German, Spanish, and UK LA/M SF for twin-aisle large civil aircraft,
including the A300, A310, A330, A340, A350XWB, and their derivatives;
(e) French, German, Spanish, and UK LA/MSF fo r large civil aircraft in the very large
category, including the A380 and its derivatives;
(f) the 1987, 1988, 1992, and 1994 French capital contributions into Aérospatiale;
(g) KfW's 1989 capital contribution into Deut sche Airbus GmbH and the 1992 transfer
by KfW of its 100 percent equity interest in Deutsche Airbus to MBB;
(h) Spanish regional development grants to the EADS/CASA facilities at La
Rinconada/San Pablo, Tablada, and Puerto de Santa Maria, Spain, and the Airbus
España, S.L. facilities in Illescas and Puerto Real;
(i) German regional development grant fo r an A380-related facility of Airbus
Deutschland GmbH in Nordenham, Germany;
(j) use by Airbus of the Mühlenberger Loch industrial site subject to the amended lease
agreement between Airbus Deutschland GmbH and Projektierungsgesellschaft
Finkenwerder mbH & Co. KG;
(k) subsequent share transactions and cash transactions and cash extractions involving
subsidy recipients; and
(l) any amendments, revisions, implementing measures for, or measures related to the
subsidies described above.
6. The United States understands the measures giving rise to these subsidies to include:
(a) the measures identified in the EU Notifi cation, including those identified in steps
1-36 therein;
(b) to the extent not covered by subparagr aph (a), French, German, Spanish, and UK
LA/MSF for single-aisle large civil aircraft, including the A320 and its derivatives; 3
(c) to the extent not covered by subparagr aph (a), French, German, Spanish, and UK
LA/MSF for twin-aisle large civil aircraft , including the A300, A310, A330, A340,
and A350XWB, and their derivatives; 4

3 These include the measures cited in the panel and Appellate Body reports in EC – Large Civil
Aircraft, WT/DS316/R (adopted as modified by the Appellate Body Report, WT/DS316/AB/R, 1 June 2011)
("EC – Large Civil Aircraft (Panel) ") and EC – Large Civil Aircraft , WT/DS316/AB/R (adopted 1 June 2011)
("EC – Large Civil Aircraft (AB)").
4 These include the measures cited in the Panel and Appellate Body reports in EC – Large Civil
Aircraft (Panel) and EC – Large Civil Aircraft (AB) , and also the Protocole A350 XWB referenced in Avenant
Spanish Royal Decree 1666/2009 and other measures setting out the conditions under which the French,
German, Spanish, or UK government conferred LA/MSF.

(d) to the extent not covered by subparagr aph (a), French, German, Spanish, and UK
LA/MSF for large civil aircraft in the very large category, including the A380; 5 and
(e) the other measures identified in EC – Large Civil Aircraft (Panel) and EC – Large
Civil Aircraft (AB) through which the EU and certain member States conferred the
subsidies that the DSB ruled to be inconsistent with the SCM Agreement.
7. The United States considers that the subsidies referenced in paragraph 5, s ubparagraphs (c)
through (l) continue to exist and cause adverse effects because the steps identified in the EU
Notification are insufficient to remove the adverse effects or withdraw the subsidies. The United
States considers that the subsidies referenced in paragraph 5, subparagraphs (a), (b), (d), (j), (k) and (l)
exist and cause adverse effects because the measures listed in paragraph 6, including the measures
identified in steps 1 through 24 of the EU Notif ication and the measures implementing LA/MSF for
the A350XWB, introduced new subsidies.
8. The subsidies listed in paragraph 5 also resu lt in the following inconsistencies with the SCM
Agreement:
(a) French, German, Spanish and UK LA/MSF for the A350XWB and A380 are
inconsistent with Article 3.1(a) because th ey are subsidies contingent in fact upon
export performance;
(b) French, German, Spanish and UK LA/MSF for the A350XWB and A380 are
inconsistent with Article 3.1(b) because they are subsidies contingent upon the use of
domestic over imported goods;
(c) all of the subsidies listed in paragraph 5 are inconsistent with Articles 5(c), 6.3(a),
6.3(b), and 6.3(c) because they are specific subsidies within the meaning of Articles 1
and 2, and result in
(i) displacement and impedance of impo rts of large civil aircraft of the
United States into the market of the EU within the meaning of Article 6.3(a);
(ii) displacement and impedance of exports of large civil aircraft of the
United States into third-country markets, including Australia, China, India,
Korea, Singapore, and the United Arab Emirates within the meaning of
Article 6.3(b); and
(iii) significant lost sales in the world mark et for large civil aircraft within the
meaning of Article 6.3(c).
Accordingly, the United States considers that the EU and certain member States did not withdraw the
subsidies or remove their adverse effects for purpo ses of Article 7.8 of the SCM Agreement, and the
EU and certain member States have failed to implement the DSB's recommendations and rulings. The
United States requests that the DSB refer this matter to the original panel, if possible, as set out in
Article 21.5 of the DSU.

Aircraft (Panel) and EC – Large Civil Aircraft (AB)