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 AB-2016-6
Document: Report of the Appellate Body Addendum
Date: 15 May 2018
Document codes: WT/DS316/AB/RW/Add.1; WT/DS316/AB/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
AB-2016-6
Report of the Appellate Body
Addendum
This Addendum contains Annexes A to D to the Report of the Appellate Body circulated as
document

The Notices of Appeal and Other Appeal and the executive summaries of written submissions
contained in this Addendum a re attached as they were received from the participants and third
participants. The content has not been revised or edited by the Appellate Body, except that
paragraph and footnote numbers that did not start at one in the original may have been
re-numbered to do so, and the text may have been formatted in order to adhere to WTO style. The
executive summaries do not serve as substitutes for the submissions of the participants and third
participants in the Appellate Body's examination of the appeal.

LIST OF ANNEXES
ANNEX A
NOTICES OF APPEAL AND OTHER APPEAL
Contents Page
Annex A-1 European Union's Notice of Appeal 4
Annex A-2 United States' Notice of Other Appeal 9
ANNEX B
ARGUMENTS OF THE PARTICIPANTS
Contents Page
Annex B-1 Executive summary of the European Union's appellant's submission 11
Annex B-2 Executive summary of the United States' other appellant's submission 29
Annex B-3 Executive summary of the United States' appellee's submission 31
Annex B-4 Executive summary of the European Union's appellee's submission 37
ANNEX C
ARGUMENTS OF THE THIRD PARTICIPANTS
Contents Page
Annex C-1 Executive summary of Brazil's third participant's submission 44
Annex C-2 Executive summary of Canada's third participant's submission 45
Annex C-3 Executive summary of China's third participant's submission 48
Annex C-4 Executive summary of Japan's third participant's submission 50
ANNEX D
PROCEDURAL RULINGS
Contents Page
Annex D-1 Procedural ruling of 25 October 2016 regarding additional procedures
to protect business confidential information (BCI) and highly sensitive
business information (HSBI)
52
Annex D-2 Procedural ruling of 21 November 2016 regarding the inclusion of an
individual to the European Union's BCI/HSBI Approved Persons List
60
Annex D-3 Procedural ruling of 21 November 2016 regarding the designation of
BCI in the United States' other appellant's submission
62
Annex D-4 Procedural ruling of 11 January 2017 regarding the European Union's
request to modify the deadline for filing its appellee's submission
64
Annex D-5 Procedural ruling of 19 April 2017 regarding public observation of the
oral hearing
66

ANNEX A
NOTICES OF APPEAL AND OTHER APPEAL
Contents Page
Annex A-1 European Union's Notice of Appeal 4
Annex A-2 United States' Notice of Other Appeal 9

ANNEX A-1
EUROPEAN UNION'S NOTICE OF APPEAL*
Pursuant to Article 16.4 and Article 17.1 of the DSU, the European Union hereby notifies to the
Dispute Settlement Body its decision to appeal to the Appellate Body certain issues of law covered
in the Panel Report and certain legal interpretations developed by the Panel in the dispute
European Union – Measures Affecting Trade in Large Civil Aircraft (Recourse to Article 21.5 of the
DSU by the United States) (WT/DS316/RW). Pursuant to Rule 20(1) of the Working Procedures for
Appellate Review , the European Union simultaneously files this Notice of Appeal wit h the
Appellate Body Secretariat.
The European Union is restricting its appeal to those errors that it believes constitute serious
errors of law and legal interpretation that need to be corrected. Non -appeal of an issue does not
signify agreement therewith.
For the reasons to be further elaborated in its submissions to the Appellate Body, the European
Union appeals, and requests the Appellate Body to reverse, modify or declare moot and of no legal
effect, the findings, conclusions and recommendations of the Panel, with respect to the following
errors of law and legal interpretations contained in the Panel Report1:
I. WHETHER THE PANEL PROPERLY I NTERPRETED ARTICLE 7 .8 OF THE
SCM AGREEMENT (SECTIONS 6.6.2 AND 6.6.3 OF THE REPORT)
1. The Panel erred in interpreting Article 7.8 of the SCM Agreement to require an
implementing Member to “remove the adverse effects” found from an actionable subsidy in
original proceedings, even if that subsidy has been “withdraw{n}” and is no longer
“maintain{ed}”.2
2. The Panel additionally erred in its interpretation of Article 7.8 (in conjunction with
Article 1.1(a)) of the SCM Agreement ) when finding that bringing about the end of a
financial contribution does not result in withdrawal of the subsidy. 3 The European Union
requests the Appellate Body to consider this appeal only if the Appellate Body reverses the
Panel’s interpretation of Article 7.8 and attempts to complete the analysis under a proper
interpretation of Article 7.8.
II. WHETHER THE PANEL ERRED BY REFUSING TO ASSESS WHETHER THE EUROPEAN
UNION ACHIEVED COMPL IANCE IN RESPECT OF THE MÜHLENBERGER LOC H AND
BREMEN AIRPORT RUNWA Y SUBSIDIES (SECTION S 5.10, 6.2.5 AND 6. 6.3.4.4 OF
THE REPORT)
3. The Panel erred in interpreting Article 21.5 of the DSU as pr oviding an original respondent
with the right to seek findings of compliance in Article 21.5 compliance proceedings only in
the narrow factual circumstances of the US/Canada – Continued Suspension dispute.4

* This notification, dated 13 October 2016, was circulated to Members as document WT/DS316/29.

1 Paragraph numbers provided in footnotes to the following description of the errors of the Panel are
intended to indicate the primary instance of the errors. These errors have consequences throughout the report,
and the European Union also appeals all findings and conclusions deriving from or relying on the appealed
errors, and in particular the relevant findings and conclusions in Sections 7.1, 7.2, 7.3 and 7.4 of the Panel
Report.
2 Panel Report, paras. 6.803, 6.813, 6.819, 6.822, 6.838, 6.839-6.841, 6.1078, 6.1089, 6.1094,
6.1100, 6.1101-6.1102, 6.1451-6.1452, 6.1463, 6.1534, 6.1774, 6.1798, 6.1817, 6.1838, 6.1846, 6.1847,
7.1(d)(i), 7.1(d)(viii), 7.1(d)(ix), 7.1(d)(xii)-(xvii) and 7.2.
3 Panel Report, paras. 6.1072-6.1074, 6.1451-6.1452, 6.1463, 6.1534, 6.1774, 6.1798, 6.1817,
6.1838, 6.1846, 6.1847, 7.1(d)(i), 7.1(d)(viii), 7.1(d)(ix), 7.1(d)(xii)-(xvii) and 7.2.
4 Panel Report, paras. 5.76-5.78, footnote 53 to para. 6.3, footnote 109 to para. 6.42, and footnote
1847 to para. 6.1102.

4. The Panel erred in the application of Article 2 1.5 of the DSU by finding that no
disagreement, within the meaning of Article 21.5 of the DSU, existed between the
European Union and the United States, and consequently by failing to make findings
concerning the European Union’s withdrawal of the Mühlenberger Loch and Bremen airport
runway subsidies.5
5. Separately, by declining to make findings on a matter that was properly before it, the
Panel failed to make an objective assessment of the matter, under Article 11 of the DSU.6
III. WHETHER LA/MSF FOR T HE A350X WB IS A SUBSIDY (SEC TION 6.5.2 OF THE
REPORT)
6. The Panel erred when identifying the appropriate point in time from which to draw the
corporate borrowing rate component of the market benchmark to determine whether each
A350XWB launch aid/member state financi ng (“LA/MSF”) contract confers a “benefit”, and
therefore constitutes a subsidy, under Article 1.1(b) of the SCM Agreement.7 Specifically,
in identifying the corporate borrowing rate as “the average yields {on the relevant EADS
bond} one-month prior and six-months prior to the conclusion of the contract, in the form
of a range”, 8 the Panel erred in the application of Articles 1.1(b) and 7.8 of the
SCM Agreement.9
7. Separately, by rejecting the yield on the day of the conclusion of each contract, the Panel
failed to make an objective assessment of the matter, under Article 11 of the DSU.10
8. Should the Appellate Body disagree with the European Union and reject the appeals
described in paragraphs 6 and 7, the European Union appeals the Panel’s inclusion, in its
construction of the corporate borrowing rate, of the six -month average yield on the
relevant EADS bond within the Panel’s range of average yields. 11 Specifically, by including
the six -month average yield within its range, the Panel erred in the application of
Articles 1.1(b) and 7.8 of the SCM Agreement.12
9. Separately, by including the six -month average yield within its range, the Panel failed to
make an objective assessment of the matter, under Article 11 of the DSU.13
10. Further, the Panel erred in identifying the project risk premium component of the market
benchmark to determine whether each A350XWB LA/MSF contract confers a “benefit”, and
therefore constitutes a subsidy, under Article 1.1(b) of the SCM Agreement.14 The Panel
selected a single undifferentiated project risk premium for each A350XWB LA/MSF
contract, which was developed for a different programme (i.e., the A380) in the original
proceedings. In so doing, the Panel committed three sets of error.
11. First, the Panel failed to establish a project -specific risk premium for A350XWB LA/MSF
based on the risks associated with the A350XWB programme. As a result, the Panel erred
in the application of Articles 1.1(b) and 7.8 of the SCM Agreement.15

footnote 1847 to para. 6.1102.
footnote 1847 to para. 6.1102.
7 Panel Report, paras. 6.389, 6.430 (Table 7) and 6.632 (Table 10).
8 Panel Report, para. 6.389.
9 Panel Report, paras. 6.389, 6.430 (Table 7) and 6.632 (Table 10).
10 Panel Report, paras. 6.389, 6.430 (Table 7) and 6.632 (Table 10).
11 Panel Report, paras. 6.389, 6.430 (Table 7) and 6.632 (Table 10).
12 Panel Report, paras. 6.389, 6.430 (Table 7) and 6.632 (Table 10).
13 Panel Report, paras. 6.389, 6.430 (Table 7) and 6.632 (Table 10).
14 Panel Report, paras. 6.435, 6.459, 6.487, 6.492, 6.527, 6.539-6.542, 6.579, 6.595, 6.607,
6.608-6.610, 6.632 (Table 10), 6.633, 6.656, 6.1798, 6.1817, 6.1847, 7.1(c)(i), 7.1(d)(xiii)-7.1(d)(xvii)
and 7.2.
15 Panel Report, paras. 6.435, 6.459, 6.608-6.610, 6.632 (Table 10), 6.633, 6.656, 6.1798, 6.1817,
6.1838, 6.1846, 6.1847, 7.1(c)(i), 7.1(d)(xiii)-7.1(d)(xvii) and 7.2.

12. Separately, by failing to consider more appropriate benchmarks and by deviating from the
approach to project-specific benchmarks taken in the original proceedings, the Panel failed
to make an objective assessment of the matter, under Article 11 of the DSU.16
13. Second, by failing to establish similarity between the ris ks involved in the A350XWB
project and the A380 LA/MSF project, as well as between the risks involved in the
A350XWB LA/MSF contracts and the A380 LA/MSF contracts, the Panel failed to make an
objective assessment of the matter, under Article 11 of the DSU.17
14. Third, and finally, the Panel erroneously adopted a single project risk premium to
benchmark all four A350XWB LA/MSF contracts. As a result, the Panel erred in the
application of Articles 1.1(b) and 7.8 of the SCM Agreement.18
15. Separately, by failing to adopt a differentiated project risk premium while adopting a
differentiated corporate borrowing rate, the Panel failed to make an objective assessment
of the matter, under Article 11 of the DSU.19
IV. WHETHER THE PANEL ERRED IN IDENTIFYING APPROPRIATE PRODUCT MARKETS
(SECTION 6.6.4.4 OF THE REPORT)
16. The Panel erred in its interpretation of the term “market” in Article 6.3 of the
SCM Agreement, as permitting two products to be placed in the same product market on
the basis of any competition between them, ra ther than on the basis of the existence of
significant competitive constraints between them.20
17. Should the Appellate Body disagree with the European Union and reject the appeal
described in paragraph 16 , the Panel erred in the application of Articles 5(c), 6 .3 and
Article 7.8 of the SCM Agreement when it identified the relevant product markets for
purposes of assessing the United States’ adverse effects claims in a manner that is
inconsistent with its own legal standard.21
18. Separately, by limiting its assessment of the existence of the relevant product markets for
purposes of assessing the United States’ adverse effects claims to competition between
only those products that the United States had placed in the same product markets, the
Panel failed to make an objective assessment of the matter, under Article 11 of the DSU.22
V. WHETHER THE PANEL ER RED IN REACHING ITS FINDINGS RELATING TO THE
“NON-SUBSIDIZED LIKE PROD UCT” PROVISIONS OF A RTICLES 6.3, 6.4 AND 6.5
OF THE SCM AGREEMENT (SECTION 6.6.4.3 OF THE REPORT)
19. The Panel erred in reaching its findings on whether there is a new matter. Specifically, the
Panel erred in its interpretation and application of the term “matter” in Article 11 of the

16 Panel Report, paras. 6.435, 6.459, 6.608-6.610, 6.632 (Table 10), 6.633, 6.656, 6.1798, 6.1817,
6.1838, 6.1846, 6.1847, 7.1(c)(i), 7.1(d)(xiii)-7.1(d)(xvii) and 7.2.
17 Panel Report, paras. 6.487, 6.492, 6.527, 6.539-6.542, 6.579, 6.595, 6.607, 6.608-6.610, 6.632
(Table 10), 6.633, 6.656, 6.1798, 6.1817, 6.1838, 6.1846, 6.1847, 7.1(c)(i), 7.1(d)(xiii)-7.1(d)(xvii) and 7.2.
18 Panel Report, paras. 6.607, 6.608-6.610, 6.632 (Table 10), 6.633, 6.656, 6.1798, 6.1817, 6.1838,
6.1846, 6.1847, 7.1(c)(i), 7.1(d)(xiii)-7.1(d)(xvii) and 7.2.
19 Panel Report, paras. 6.607, 6.608-6.610, 6.632 (Table 10), 6.633, 6.656, 6.1798, 6.1817, 6.1838,
6.1846, 6.1847, 7.1(c)(i), 7.1(d)(xiii)-7.1(d)(xvii) and 7.2.
20 Panel Report, paras. 6.1210, 6.1211, 6.1236, 6.1280, 6.1289, 6.1292, 6.1305, 6.1320, 6.1348,
6.1382, 6.1362, 6.1409, 6.1416, 6.1798, 6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(xi), 7.1(d)(xiv)-7.1(d)(xvii)
and 7.2.
21 Panel Report, paras. 6.1292, 6.1305, 6.1320, 6.1348, 6.1382, 6.1362, 6.1409, 6.1416, 6.1798,
6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(xi), 7.1(d)(xiv)-7.1(d)(xvii) and 7.2.
22 Panel Report, paras. 6.1292, 6.1305, 6.1320, 6.1348, 6.1382, 6.1362, 6.1409, 6.1416, 6.1798,
6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(xi), 7.1(d)(xiv)-7.1(d)(xvii) and 7.2.

DSU.23 The Panel also erred in failing to make an objective assessment of t he matter,
under Article 11 of the DSU.24
20. In addition, the Panel erred in reaching its findings on cogent reasons. Specifically, the
Panel erred in its interpretation and application of “security and predictability” within the
meaning of Article 3.2 of t he DSU as it relates to the cogent reasons rule; 25 and, erred in
failing to make an objective assessment of the matter, under Article 11 of the DSU.26
21. Finally, the Panel erred in its interpretation and application of Articles 6.3(a), 6.3(b),
6.3(c), 6.4 and 6.5 of the SCM Agreement.27
VI. WHETHER THE PANEL ER RED IN FINDING ADVER SE EFFECTS (SECTION 6.6.4.4
OF THE REPORT)
A. EFFECTS OF LA/MSF ON THE LAUNCH AND MARKET PRESENCE OF AIRCRAFT
22. The Panel erred in the interpretation of Article 5(c) of the SCM Agreement in adopting a
“but for” approach to causation that failed to consider the passage of time, and events that
occurred during that time, and consequently attributing the current market presence of the
A320, A330 and A380 families of aircraft to pre-A350XWB LA/MSF.28
23. Should the Appellate Body disagree with the European Union and reject the appeal
described in paragraph 22, the Panel erred in the application of Articles 5(c) and 7.8 of the
SCM Agreement in adopting a “but for” approach to causation that failed to consider the
passage of time, and events that occurred during that time, and consequently attributing
the current market presence of the A320 and A330 families of aircraft to pre -A350XWB
LA/MSF.29
24. Separately, to the extent the Panel found that LA/MSF for the A380 resulted in “direct
effects” on the launch and market presence of the A380, the Panel failed to make an
objective assessment of the matter, under Article 11 of the DSU.30
25. The Panel additionally erred in the application of Articles 5(c) and 7.8 of the
SCM Agreement by attributing the market presence of the A350XWB to the “indirect
effects” of LA/MSF for the A380.31
26. Separately, to the extent the Panel found that LA/MSF for the A350XWB resulted in “direct
effects” on the launch and market presence of the A350XWB, the Panel failed to make an
objective assessment of the matter, under Article 11 of the DSU.32

23 Panel Report, paras. 6.1125-6.1138, 6.1154, 6.1798, 6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(x),
7.1(d)(xiv)-7.1(d)(xvii) and 7.2.
24 Panel Report, paras. 6.1125-6.1138, 6.1154, 6.1798, 6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(x),
7.1(d)(xiv)-7.1(d)(xvii) and 7.2.
25 Panel Report, paras. 6.1125-6.1153, 6.1154, 6.1798, 6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(x),
7.1(d)(xiv)-7.1(d)(xvii) and 7.2.
26 Panel Report, paras. 6.1125-6.1153, 6.1154, 6.1798, 6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(x),
7.1(d)(xiv)-7.1(d)(xvii) and 7.2.
27 Panel Report, paras. 6.1125-6.1154, 6.1798, 6.1817, 6.1847, 7.1(d)(x), 7.1(d)(xiv)-7.1(d)(xvii)
and 7.2.
28 Panel Report, paras. 6.1515, 6.1527, 6.1534, 6.1774, 6.1798, 6.1817, 6.1838, 6.1846, 6.1847,
7.1(d)(xii)-7.1(d)(xvii) and 7.2.
29 Panel Report, paras. 6.1527, 6.1534, 6.1774, 6.1798, 6.1817, 6.1838, 6.1846, 6.1847,
7.1(d)(xii)-7.1(d)(xvii) and 7.2.
30 Panel Report, paras. 6.1507, 6.1798, 6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(xii)-7.1(d)(xvii)
and 7.2.
31 Panel Report, paras. 6.1747, 6.1771, 6.1773, 6.1774, 6.1798, 6.1817, 6.1838, 6.1846, 6.1847,
7.1(d)(xiii)-7.1(d)(xvii) and 7.2.
32 Panel Report, paras. 6.1717, 6.1798, 6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(xiii)-7.1(d)(xvii)
and 7.2.

B. FINDINGS OF DISPLACEMENT, IMPEDANCE AND LOST SALES
27. The Panel erred in the application of Articles 5(c), 6.3 and 7.8 of the SCM Agreement by
failing, in its assessment of lost sales, displacement and impedance, to account for the
differences in closeness of competition between various aircraft.33
28. The Panel erred in the application of Articles 5(c), 6.3 and 7.8 of the SCM Agreement by
failing, in its assessment of lost sales, displacement and impedance, to account for
non-attribution factors.34
29. The Panel erred in the interpretation of Articles 6.3(a) and 6.3(b) of the SCM Agreement in
finding that non -withdrawn subsidies cause “displacement and/or impedance”, thereby
conflating the two separate forms of serious prejudice.35
30. The Panel erred in the interpretation of Articles 6.3(a) and 6.3(b) of the SCM Agreement as
permitting findings of “displacement” without any assessment of sales volume and market
share data.36
31. In addition, the Panel also erred in the application of Articles 5(c), 6.3(a), 6.3(b ) and 7.8
of the SCM Agreement by finding “displacement” without any assessment of sales volume
and market share data.37
32. The Panel erred in the interpretation of Articles 6.3(a) and 6.3(b) of the SCM Agreement as
permitting findings of “impedance” without a ny assessment of sales volume and market
share data.38
33. In addition, the Panel also erred in the application of Articles 5(c), 6.3(a), 6.3(b) and 7.8
of the SCM Agreement by finding “impedance” without any assessment of sales volume
and market share data.39

33 Panel Report, paras. 6.1798, 6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(xiv)-7.1(d)(xvii) and 7.2.
34 Panel Report, paras. 6.1798, 6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(xiv)-7.1(d)(xvii) and 7.2.
35 Panel Report, paras. 6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(xiv)-7.1(d)(xvii) and 7.2.
36 Panel Report, paras. 6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(xiv)-7.1(d)(xvii) and 7.2.
37 Panel Report, paras. 6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(xiv)-7.1(d)(xvii) and 7.2.
38 Panel Report, paras. 6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(xiv)-7.1(d)(xvii) and 7.2.
39 Panel Report, paras. 6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(xiv)-7.1(d)(xvii) and 7.2.

ANNEX A-2
UNITED STATES' NOTICE OF OTHER APPEAL*
Pursuant to Rule 23(1) of the Working Procedures for Appellate Review, the United States hereby
notifies the Appellate Body of its decision to appeal certain issues of law covered in the Report of
the Panel in 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
(WT/DS316/RW & Add.1) ( "Panel Report ") and certain legal interpretations dev eloped by
the Panel.

1. The United States seeks review by the Appellate Body of the Panel's finding that the
United States failed to establish that the French, German, Spanish, and UK LA/MSF subsidies for
Airbus's A350 XWB constituted prohibited import substitution subsidies, within the meaning of
Article 3.1(b) of the Agreement on Subsidies and Countervailing Measures ( "SCM Agreement").1
While the United States agrees with the Panel's interpretation of Article 3.1(b), a competing
interpretation is unde r consideration in another dispute, US – Conditional Tax Incentives for
Large Civil Aircraft (DS487). If the Appellate Body were to determine that this competing
interpretation of Article 3.1(b) is correct, then the Panel here erred in its interpretation a nd
application of Article 3.1(b) and its finding that the French, German, Spanish, and UK LA/MSF for
the A350 XWB do not constitute import substitution subsidies prohibited by Article 3.1(b).
The paragraphs relating to these errors include paragraphs 6.745-6.791 of the Panel Report.

2. In addition, the United States conditionally appeals the Panel's findings that the ex ante lives
of the French, German, Spanish, and UK LA/MSF subsidies for the A320, A330/A340 Basic, and
A330-200 had passively "expired" before December 1, 2011, as a result of the amortization of
benefit.2 These conclusions are in error and are based on erroneous findings of law and related
legal interpretations, including an erroneous interpretation and application of Article 1.1(b) of the
SCM Agreement. The paragraphs relating to these errors include paragraphs 6.872 -6.879 of the
Panel Report. However, the United States only requests the Appellate Body to address this issue if
it modifies or reverses the Panel's finding that the passive "expiry" events cited by the
European Union did not satisfy its obligation to "withdraw the subsidy" for purposes of Article 7.8
of the SCM Agreement.3

* This notification, dated 10 November 2016, was circulated to Members as document WT/DS316/30.

1 See Panel Report, paras. 6.790, 7.1(c)(ii).
2 See Panel Report, paras. 6.879, 7.1(d)(ii) and (iii).
3 See Panel Report, paras. 6.1094, 7.1(d)(viii).

ANNEX B
ARGUMENTS OF THE PARTICIPANTS
Contents Page
Annex B-1 Executive summary of the European Union's appellant's submission 11
Annex B-2 Executive summary of the United States' other appellant's submission 29
Annex B-3 Executive summary of the United States' appellee's submission 31
Annex B-4 Executive summary of the European Union's appellee's submission 37

ANNEX B-1
EXECUTIVE SUMMARY OF THE EUROPEAN UNION'S APPELLANT'S SUBMISSION
1 INTRODUCTION
1. The European Union’s Appellant’s Submission sets out appeals of a number of serious errors of
law and legal interpretation in the Report of the Panel in European Communities and certain
Member States – Measures Affecting Trade in Large Civil Aircraft (Reco urse to Article 21.5 of
the DSU by the United States) (“compliance Panel” or “Panel”).
2 THE PANEL ERRED IN T HE INTERPRETATION OF ARTICLE 7.8 OF THE
SCM AGREEMENT1
2. The Panel erred in interpreting Article 7.8 to require an implementing Member, found in
original proceedings to have granted or maintained subsidies that cause adverse effects, to
“remove the adverse effects” of the subsidies, “ irrespective of whether those subsidies
continue to exist in the implementation period”. 2 That is, for the Panel, an o bligation to
“remove the adverse effects” applies even if the implementing Member no longer “grant{s} or
maintain{s}” the subsidy at issue after the end of the implementation period, but has, instead,
“withdraw{n} the subsidy”.
3. Properly interpreted, the terms of Article 7.8, viewed in their context and in light of the object
and purpose of the SCM Agreement , provide an implementing Member that is “ granting or
maintaining” an actionable subsidy, which was found in original proceedings to cause adverse
effects, with the option either “to remove the adverse effects or ... withdraw the subsidy”.
Thus, as is the case throughout the covered agreements with regard to any WTO -inconsistent
measure, withdrawal of the measure (here, an actionable subsidy) constitutes compliance,
regardless whether any historically caused effects of the withdrawn measure temporarily linger
in the marketplace. In this respect, compliance under the SCM Agreement follows the same
principles that apply throughout the covered agreements.
4. Whilst in cases of other WTO -inconsistent measures, an adverse impact is presumed pursuant
to Article 3.8 of the DSU, for adverse effects claims under Part III of the SCM Agreement, an
alleged adverse effect must be demonstrated. In other words, in the c ontext of adverse
effects claims, the burden to establish effects in the marketplace is shifted to the complainant.
This places an additional burden on the complainant, reflecting the fact that, unlike other
measures (including a prohibited subsidy), an a ctionable subsidy is WTO -inconsistent solely if
it is demonstrated to cause adverse effects. Thus, unlike a prohibited subsidy, an actionable
subsidy is “not prohibited per se”.3 These considerations confirm that compliance with adverse
effects findings can be achieved either by withdrawing the subsidy measure or by removing
the adverse effects.
5. In contrast, with its interpretation of Article 7.8, the Panel placed an additional compliance
burden on a respondent found in original proceedings to have granted an actionable subsidy.
Under the Panel’s interpretation of Article 7.8, respondents face a unique and exacting
compliance obligation with regard to an actionable subsidy – an obligation that does not attach
to any other WTO -inconsistent measure, including prohibited subsidies. Under the Panel’s
interpretation, compliance with recommendations and rulings concerning an actionable subsidy
requires removal of any effects temporary lingering in the marketplace, even if the subsidy has
already been withdrawn.
6. The Panel arrived at its erroneous interpretation of Article 7.8 not on the basis of the proper
application of the Vienna Convention rules on treaty interpretation. Rather, the Panel’s

1 Panel Report, paras. 6.803, 6.813, 6.819, 6.822, 6.838, 6.839, 6.840, 6.1078, 6.1100, 6.1101,
6.1102, 7.1(d)(i), 7.1(d)(viii), 7.1(d)(ix).
2 Panel Report, para. 6.822 (emphasis in original).
3 Appellate Body Report, US – Upland Cotton (Article 21.5 – Brazil), para. 238 (emphasis in original).

interpretative approach was explicitly outcome-determined, namely to “avoid ... an outcome”4
that would, in the Panel’s view, make the ruling secured by the United States in the original
proceedings “purely declaratory” with respect to an expired subsidy.5 To “avoid an outcome” it
considered undesirable, the Panel developed a contrived interpretation that conflicts not only
with the ordinary meaning of the terms used in Article 7.8, but also with the context of the
provision, and with the overall object and purpose of the SCM Agreement.
7. The Panel recognised that its interpretation is not rooted in the terms of Article 7.8 . Instead,
the Panel acknowledged that the reference in Article 7.8 to “granting or maintaining” of a
subsidy suggests that compliance obligations regarding an actionable subsidy are triggered
whenever “an implementing Member continues to grant or maintain a subsidy found to have
caused adverse effects in an original proceeding”. 6 Moreover, the Panel acknowledged that
“the te xt of Article 7.8 may arguably be viewed to suggest that a Member found to have
caused adverse effects through the use of a subsidy would have no obligation to ‘take
appropriate steps to remove the adverse effects’ or ‘withdraw the subsidy’ if the subsidy at
issue no longer exists at the time of the DSB’s adoption of the adverse effects findings”. 7
Although the Panel acknowledged that this was the interpretation flowing from the terms
“granting or maintaining”, it adopted an interpretation unsupported by t he terms actually used
in Article 7.8, in their context, and according to the object and purpose of the SCM Agreement.
8. The Panel’s interpretation also reads the option to “withdraw the subsidy” out of the text of
Article 7.8. Under the Panel’s interpretat ion, “withdraw{al of} the subsidy” achieves
compliance only if doing so also succeeds in “remov{ing} the adverse effects”. 8 As a result,
the Panel’s interpretation renders inutile the phrase “withdraw the subsidy” and the
conjunction “or” in Article 7.8. Under the Panel’s interpretation, there remains only one option
to achieve compliance under Article 7.8, namely through removal of the adverse effects. The
Panel’s interpretation is inconsistent with the plain language of Article 7.8.
9. The Panel’s interpr etation also runs contrary to the context of Article 7.8, including the most
proximate context ( i.e., Articles 7.9, 5, and 4.7 of the SCM Agreement ), the structure and
design of the SCM Agreement, and the DSU.
10. In assessing context, the Panel began, not w ith proximate context from the SCM Agreement
itself, but instead from the DSU. The Panel used the DSU not to support the meaning flowing
from the terms of Article 7.8, but rather to replace the terms of Article 7.8 with the terms of
Article 5 of the SCM Agreement. Specifically, the Panel stated that, under various provisions
of the DSU, implementation must “focus on securing conformity with the covered
agreements”.9 According to the Panel, this meant that a subsidy found to cause adverse
effects in origi nal proceedings must be brought into “ conformity with Article 5 ” of the SCM
Agreement.10
11. The Panel misconstrued the DSU and its relevance as context. First, the Panel ignores that, as
set forth in Article 3.7 of the DSU, compliance under the DSU is focus ed on the withdrawal of
the WTO-inconsistent measure. Where a WTO -inconsistent measure is withdrawn, the DSU
does not impose any additional requirement to remove any lingering effects in the
marketplace. On the Panel’s view, findings in original proceedi ngs are, therefore, always
“purely declarative” with respect to temporary lingering effects of a WTO-inconsistent measure
in the marketplace. This feature of WTO dispute settlement has not stopped WTO Members
from challenging WTO -inconsistent measures and seeking their withdrawal, despite the
possibility of a temporarily lingering impact of the withdrawn measure on competitive
opportunities in the marketplace.

5 Panel Report, paras. 6.840, 6.1094. See also Id., para. 6.819 (“merely ‘declaratory in nature’”);
para. 6.830 (“would also render the disciplines of Article 5 completely ineffective”).
6 Panel Report, para. 6.802 (emphasis in original).
7 Panel Report, para. 6.802 (emphasis in original).
8 Panel Report, paras. 6.813, 6.819, 6.840, 6.1078, 6.1088, 6.1098, 6.1099.

12. Second, the Panel relied on the DSU in a way that deprives Article 7.8 of independent
meaning, distinct from Article 5 of the SCM Agreement. The Panel erroneously assumed that,
with respect to an actionable subsidy in compliance proceedings, “conformity” with the
SCM Agreement is defined exclusively by reference to Article 5, with Article 7.8 subsumed by
and read exclusively through the prism of Article 5. The Panel’s assumption is wrong. The
Appellate Body has explained that “Article 7.8 specifies the actions that the respon dent
Member must take when a subsidy granted or maintained by that Member is found to have
resulted in adverse effects to the interests of another Member”. 11 Thus, to achieve
compliance, Article 7.8 – and not Article 5 – “specifies the actions that the res pondent must
take”.
13. Turning to Article 5 as context, the Panel did not explicitly rely on the terms of this provision to
shed light on the interpretation of Article 7.8. Instead, it turned to the DSU to reach the
erroneous conclusion that Article 7.8 mu st be subsumed by and read exclusively through the
prism of Article 5. In so doing, the Panel collapsed the substantive obligations under Article 5
and the implementation obligations under Article 7.8, despite the textual differences between
the provision s. Article 5 (like Article 6) is concerned with “ caus{ing} .... adverse effects ”
through the use of any subsidy. Article 7.8 is formulated differently, and explicitly gives the
implementing Member the option either to remove adverse effects, or to withdraw a subsidy it
is granting or maintaining. Thus, contrary to Article 5, Article 7.8 is not “focus{ed} on the
causing of adverse effects through the use of any subsidy”.12
14. The Panel’s interpretation of Article 7.8 is also contradicted by context from Artic le 4.7 of the
SCM Agreement – the provision setting out the implementation obligation for prohibited
subsidy findings. Article 4.7 provides a single implementation option, namely to “withdraw the
subsidy”. Although the Panel agreed that the terms “withdr aw the subsidy” must be given
“parallel” and “consistent” meaning under Articles 4.7 and 7.8, its interpretation of Article 7.8
failed to achieve this outcome. 13 Indeed, the Panel’s interpretation of Article 7.8 gives the
phrase “withdraw the subsidy” a very different and inconsistent meaning than the Panel
affords the same phrase in Article 4.7, resulting in more demanding compliance obligations for
actionable subsidies than for prohibited subsidies. Under the Panel’s interpretation, expiry of a
subsidy achieves “withdrawal” of that subsidy under Article 4.7. 14 Under Article 7.8, however,
expiry of a subsidy does not achieve “withdrawal” of that subsidy, unless expiry also achieves
removal of adverse effects.15
15. This also shows that the Panel’s interpretat ion of Article 7.8 blurs the line between prohibited
export subsidies and actionable production subsidies, which is, as the Appellate Body
explained, contrary to the overall design and structure of the SCM Agreement .16 The
interpretive approach taken by th e Panel makes compliance with actionable subsidy -related
recommendations more exacting than compliance with prohibited subsidy -related
recommendations under Article 4.7, despite the fact that Article 4.7 relates to subsidies that
are prohibited per se, while Article 7.8 relates to subsidies that are merely actionable, and are
“not prohibited per se”.17
16. Finally, the Panel’s interpretation of Article 7.8 also frustrates the object and purpose of the
SCM Agreement, as it ignores the textual flexibility afford ed to implement findings regarding
actionable subsidies. Under the Panel’s interpretation, an actionable subsidy would face a
unique and exacting compliance obligation, not present with regard to a prohibited subsidy,
nor with regard to any other WTO -inconsistent measure disciplined under the covered
agreements. This outcome cannot be reconciled with the object and purpose of the
SCM Agreement.
17. The European Union notes that the Panel’s erroneous interpretation of Article 7.8 directly
informed its erroneous refusal to recognise that, with respect to each subsidy withdrawn as a

11 Appellate Body Report, US – Upland Cotton (Article 21.5 – Brazil), para. 235 (emphasis added).
12 Appellate Body Report, EC – Large Civil Aircraft, para. 712 (emphasis added).
13 Panel Report, para. 6.1098.
14 Panel Report, para. 6.1097. See also Id., paras. 6.1085-6.1086.
15 Panel Report, paras. 6.1086, 6.1098.
16 Appellate Body Report, EC – Large Civil Aircraft, para. 1054 (emphasis in original).
17 Appellate Body Report, EC – Large Civil Aircraft, para. 708.

result of expiry of the life of the subsidy or otherwise, the compliance remedy specified in
Article 7.8 had been provided. Consequently, the Panel’s erroneous interpretation of
Article 7.8 also undermined the Panel’s adverse effects-related findings.18 The European Union
also appeals several of these findings directly, on separate and unrelated grounds.
18. If the Appellate Body reverses the Panel’s interpretation of Article 7.8 and attempts to
complete the analysis, the European Union raises a conditional appeal. Specifically, the Panel
erred in its interpretation of Article 7.8 (in conjunction with Article 1.1(a)) when finding that
repayment of a financial contribution does not constitute withdrawal of the subsidy.19
19. The Panel acknowledged that the full repayment of the principal of a subsidised loan, plus any
interest due under the terms of that loan, would “bring about the end of the financial
contribution, in the sense that there would be no longer any financial contribution in
existence”.20 That is, the Panel accepted that, in this scenario, one of the constituent elements
of the subsidy (i.e., a financial contribution) is no longer present. At the same time, the Panel
found that bringing about the end of the financial contribution does not suffice to bring about
the end of, and thus to withdraw, the subsidy.
20. In so finding, the Panel erred in the interp retation of Article 1 and 7.8 of the SCM Agreement.
Bringing about the end of one of the constituent element of a “subsidy”, within the meaning of
Article 1, also brings the life of the subsidy to an end, implying that this subsidy is no longer
maintained and is, instead, withdrawn, within the meaning of Article 7.8. In the original
proceedings, the Appellate Body made an express finding to this effect, when it stated that the
“life” of a subsidy may come “to an end, either through the removal of the fina ncial
contribution and/or the expiration of the benefit”.21
3 THE PANEL ERRED IN R EFUSING TO ASSESS WH ETHER THE EUROPEAN U NION HAS
ACHIEVED COMPLIANCE IN RESPECT OF THE MÜ HLENBERGER LOCH AND BREMEN
AIRPORT RUNWAY SUBSIDIES22
21. In its Compliance Communication, the European Union indicated that it had adopted
“measures taken to comply” (“MTTCs”) that resulted in the withdrawal of the subsidies arising
under (i) the leases of the land and the special -purpose facilities in the Mühlenberger Loch,
and (ii) the take -off and landing fees at Bremen airport. Specifically, the MTTCs aligned the
terms of the leases and the take-off and landing fees with relevant market benchmarks.23 The
United States identified these MTTCs in its panel request.24 Throughout the Panel proceedings,
the Parties continued to disagree as to whether the two EU MTTCs had achieved compliance
with the recommendations and rulings in the original proceedings,25 although the United States
declined to substantiate its position that they failed to do so.
22. In these circumstances, the matter was properly before the Panel. Moreover, the
European Union was entitled to a finding that it had withdrawn the Mühlenberger Loch and
Bremen airport runway subsidies, based on the unrefuted prima facie showing of withdrawal it
had presented. Yet, the Panel refused to make such a finding, based on a series of errors in
the interpretation and application of Article 21.5 of the DSU. The Panel also failed to
undertake an objective assessment of the matter properly before i t, under Article 11 of
the DSU.

18 Panel Report, paras. 6.1451-6.1452, 6.1463, 6.1534, 6.1774, 6.1798, 6.1817, 6.1838, 6.1846,
6.1847, 7.1(d)(xii)-(xvii), 7.2.
19 Panel Report, paras. 6.1072-6.1074.
21 Appellate Body Report, EC – Large Civil Aircraft, para. 709 (emphasis and underlining added).
footnote 1847 to para. 6.1102.
23 Communication from the European Union to the DSB, 1 December 2011, WT/DS316/17, items 28, 29,
p. 4.
24 US Request for Establishment of a Compliance Panel, WT/DS316/23, paras. 5(j), 6(a), 6(e).
25 US FWS, paras. 5 and 97, and footnote 13; US SWS, para. 265 and heading 4; US 12 February 2016
Comments on the EU Comments on Interim Panel Report, para. 48.

23. First, the Panel erred in its interpretation of Article 21.5 of the DSU, finding that the right of an
original respondent to request a determination of compliance is limited to situations in which
(i) an original respondent initiates an Article 21.5 proceeding; (ii) the original complainant
refuses to participate in that Article 21.5 proceeding; and, (iii) the original complainant had
already suspended concessions vis-à-vis the original respondent under Article 22 of the DSU.26
24. The terms used in Article 21.5 do not support such an interpretation. The “disagreement” to
be resolved in compliance proceedings under Article 21.5 of the DSU relates “to the existence
or consistency with a covered agreement of measures taken to comp ly”. Such a disagreement
may arise – and indeed regularly arises in Article 21.5 compliance proceedings – before
concessions are suspended under Article 22.
25. The Panel’s interpretation is also inconsistent with the object of “prompt settlement” reflected
in Article 3.3 of the DSU, and that of “prompt compliance” set out in Article 21.1 of the DSU.
Contrary to these objectives, the Panel’s interpretation prolongs the dispute and forces the
original respondent to endure suspension of concessions, an “abnor mal state of affairs”, 27
before it can seek recourse to Article 21.5. Such an interpretation also disturbs the “proper
balance between the rights and obligations of Members” that the dispute settlement system is
tasked with preserving.28
26. Second, the Panel erred in the application of Article 21.5 of the DSU, in finding that a
“disagreement” did not exist between the Parties in respect of the two MTTCs at issue. 29
According to the Appellate Body, a “disagreement” under Article 21.5 “arises from the
existence of conflicting views: the original complainant’s view that such a measure is
inconsistent with the WTO agreements or brings about only partial compliance, and the original
respondent’s view that a measure is consistent with the WTO agreements and brings ab out full
compliance with the DSB’s recommendations and rulings”. 30 The Parties repeatedly expressed
“conflicting views” on the effectiveness of the two MTTCs in securing withdrawal of the
Mühlenberger Loch and Bremen airport runway subsidies. In particula r, while the
United States refused to substantiate its view that compliance was not achieved with the two
EU MTTCs, it nonetheless maintained that view throughout the Panel proceedings, and did not
accept that, on the facts, the alignment with market bench marks achieved withdrawal of the
subsidies. The Panel erred in mistaking the US refusal to substantiate its views, for a lack of
disagreement between the Parties.
27. Third, the Panel failed to make an objective assessment of the matter, under Article 11 of t he
DSU.
28. In original proceedings, where complainant alone enjoys the right to place a matter before the
panel and to seek findings, a panel may forego findings on a claim abandoned by the
complainant. Being the sole holder of the right to seek findings in an original proceeding, the
complainant is at liberty to waive that right. In contrast, in compliance proceedings, the
original complainant no longer enjoys the sole right to place matters before a panel and seek
adjudication in the form of panel find ings and conclusions regarding the adequacy of the
responding Member’s compliance efforts. Instead, as the Appellate Body has clarified, “either
party to the original dispute may initiate the proceedings”. 31 This principle reflects the fact
that both part ies have a shared interest in the resolution of disagreements concerning
compliance.
29. Accordingly, in compliance proceedings, even if the original complainant waives its own right
to adjudication of a particular matter properly placed before a compliance panel, that waiver
does not prejudice the original respondent’s right to have the same matter adjudicated. In the
present dispute, the Panel improperly “declined to exercise validly established jurisdiction and

26 Panel Report, para. 5.77.
27 Appellate Body Report, US – Continued Suspension, para. 310; Appellate Body Report,
Canada – Continued Suspension, para. 310.
28 Article 3.3 of the DSU.
29 Panel Report, paras. 5.76-5.78.
30 Appellate Body Report, US – Continued Suspension, para. 347; Appellate Body Report,
Canada – Continued Suspension, para. 347.
31 Appellate Body Report, US – Continued Suspension, para. 347; Appellate Body Report,
Canada – Continued Suspension, para. 347.

abstained from making any finding on the mat ter before it”, 32 despite the European Union’s
express request to the contrary, and in so doing failed to make an objective assessment of a
matter properly before it.
30. The European Union requests the Appellate Body to complete the analysis and find, based on
unrefuted evidence in the record, that the European Union has achieved withdrawal of the
Mühlenberger Loch and Bremen airport runway subsidies.
4 THE PANEL ERRED IN D ETERMINING THE CORPO RATE BORROWING RATE
COMPONENT OF THE MARKET BENCHMARK FOR A350XWB LA/MSF33
31. To determine whether LA/MSF for the A350XWB confers a “benefit”, the Panel adopted a
benchmark rate of return comprised of two components: (i) a corporate borrowing rate, plus
(ii) a project risk premium. This appeal concerns the first component of th e benchmark,
whereas the appeal in Section 5 , below, concerns the second component.
32. With respect to the corporate borrowing rate component of the benchmark, the P anel erred in
identifying the benchmark as “the average yields {on an EADS bond} one -month prior and
six-months prior to the conclusion of the contract, in the form of a range”. 34 In selecting a
range of average yields, instead of adopting the yield on the day of conclusion of each
contract,35 the Panel erred in the application of Article 1.1(b), and separately failed to make an
objective assessment of the matter, under Article 11 of the DSU.
33. The Panel began by correctly identifying the legal standard unde r Article 1.1(b) of the
SCM Agreement. As noted by the Appellate Body, borrowing costs “should be observed at the
time that each particular contract was concluded”,36 which requires that “the assessment
focuses on the moment in time when the lender and borrower commit to the transaction”.37
34. The Panel’s first error arose in its application of this standard to the facts at hand. Specifically,
the Panel rejected the use of actual data pertaining to the yield at the time each contract was
concluded (i.e., on the day of conclusion of each contract), which was “the moment in time
when the lender and borrower committ{ed} to the transaction”. The Panel replaced the yield
at the time each contract was concluded with a range based on the average yields one- and
six-months prior to the time each contract was concluded. By using a range of average yields,
the Panel’s approach risks artificially increasing or lowering the market borrowing rate,
creating the danger of false positive or false negative findings of subsidisation.
35. In a second error, the Panel rejected the yield on the day of conclusion of each contract
without a sufficient evidentiary basis to do so, in contravention of Article 11 of the DSU. The
Panel’s justification for rejecting the yield on the day of conclusion of each contract was the
possibility that the rate “ may reflect atypical fluctuations”. 38 However, undisputed evidence
before the Panel demonstrated that no such distortion existed.39
36. In light of the demonstrated downward trend in yields during the period leading up to the
conclusion of the contracts, the Panel’s selection of a range of average yields prior to – instead
of at the time of – conclusion of each contract, could have but one result, of which the Panel
must surely have been aware: an artificial increase in the benchmark. These circumstances
suggest a lack of objectivity and even -handedness on the part of the Panel in its identification
of the corporate borrowing rate element of the benchmark.
37. Should the Appellate Body disagree with the EU’s main argument regarding these two errors,
the European Union appeals the Panel’s erroneous inclusion, within its range of average yields,

32 Appellate Body Report, Mexico – Taxes on Soft Drinks, para. 51.
33 Panel Report, paras. 6.389, 6.430 (Table 7), 6.632 (Table 10).
34 Panel Report, para. 6.389.
35 Panel Report, paras. 6.389, 6.430 (Table 7), 6.632 (Table 10).
37 Panel Report, para. 6.388 (emphasis added), referring to Appellate Body Report, EC – Large Civil
Aircraft, paras. 706, 825-836.
39 Panel Report, para. 6.382 (Table 6).

of the six-month average yield on the relevant EADS bond. In so doing, the Panel erred in the
application of Article 1.1(b) of the SCM Agreement, and separately failed to make an objective
assessment of the matter, under Article 11 of the DSU.40
38. First, the six -month average yield does not reflect the yi eld “at the time that each particular
contract was concluded”,41 and does not “focus{} on the moment in time when the lender and
borrower commit to the transaction ”.42 Indeed, the Panel itself found that the six -month
average was “less likely to reflect expectations during the finalisation period” of each contract
than the one -month average. 43 Including the six -month average yield within the range,
therefore, amounts to error in the application of Article 1.1(b).
39. Second, the Panel failed to provide any expla nation, let alone a reasoned and adequate
explanation, for its decision to adopt a range of values that includes the six -month average,
when – according to the Panel itself 44 – the other part of the range consisted of a more
appropriate proxy ( i.e., the one -month average). The Panel’s reasoning is also internally
inconsistent. On the one hand, the Panel criticised the use of an average yield over seven
months, due to the possibility that such an approach could result in an “artificially” lower (or
higher) market borrowing rate, and therefore could result in a “misplaced” finding of
subsidisation (or of no subsidisation). 45 On the other hand, the Panel adopted a six -month
average yield as one element of the range used for this component of the benchmark, eve n
though the six -month average demonstrably resulted in an “artificial” increase of the market
borrowing rate, and a heightened risk of “misplaced” findings of subsidisation. For these
reasons, the Panel failed to make an objective assessment of the matter, under Article 11.
40. When the Panel’s erroneous selection of the corporate borrowing rate is corrected, based
either on the EU’s main appeal argument or on its alternative appeal arguments, the Panel’s
“benefit” findings become more sensitive to the corre ct identification of the second component
of the market benchmark, i.e., the risk premium. The European Union summarises its appeal
of the Panel’s identification of the project risk premium component of the benchmark in the
next Section.
5 THE PANEL ERRED IN USING THE PROJECT-SPECIFIC RISK PREMIUM FOR ASSESSING
THE “BENEFIT” FROM A 380 LA/MSF AS THE PR OJECT RISK PREMIUM F OR A350XWB
LA/MSF46
41. In addition to identifying the wrong corporate borrowing rate component of the benchmark,
the Panel also erred in identifying the second component of the benchmark for A350XWB
LA/MSF, i.e., the project risk premium, and, consequently, erred in finding a “benefit” from
A350XWB LA/MSF.
42. The Panel’s “benefit” findings, as illustrated in Table 10 of its Report, are highly dependent on
precision and accuracy in the benchmarking exercise, with a small change in the project risk
premium potentially changing the results, from a finding that a particular LA/MSF loan
constitutes a subsidy, to a finding that it does not. However, the project risk premium chosen
by the Panel did not result from a precise an d accurate benchmarking exercise that was
tailored to the A350XWB project risks assumed by the LA/MSF lenders, under the terms of
each of the four LA/MSF contracts.
43. Instead, for all four A350XWB LA/MSF contracts, the Panel selected a single, undifferenti ated
risk premium, which was developed, in the original proceedings, for a different project, i.e.,
the A380, launched at a different moment in time , and implicating different risks. That is, to
benchmark the four A350XWB LA/MSF contracts, the Panel appli ed the risk premium
developed to benchmark another aircraft project – the A380 – and another set of LA/MSF

40 Panel Report, paras. 6.389, 6.430 (Table 7), 6.632 (Table 10).
44 Panel Report, para. 6.389.
45 Panel Report, para. 6.385.
46 Panel Report, paras. 6.1210, 6.1211, 6.1236, 6.1280, 6.1289, 6.1292, 6.1305, 6.1320, 6.1348,
6.1382, 6.1362, 6.1409, 6.1416, 6.1798, 6.1817, 7.1(d)(xi), 7.1(d)(xiv), 7.1(d)(xv), 7.1(d)(xvi), 7.1(d)(xvii).

contracts. The Panel did so without making any adjustments to the benchmark, despite its
acknowledgement of differences in risks as between the A380 project and the A350XWB
project, and differences in risks as between the four A350XWB LA/MSF contracts.
44. The approach taken by the compliance Panel is particularly surprising, in light of the concerns
expressed by the original panel about this very same approach. The original panel expressed
significant concern about the use of a single, undifferentiated project risk premium across LCA
programmes receiving LA/MSF, precisely because such an approach ignores the differentiated
risks borne by lenders for ea ch specific LCA programme, and in each specific LA/MSF
contract.47 The Appellate Body echoed this concern, adding that it was “the Panel’s duty to
assess, based on the evidence on record, whether the application of a constant project risk
premium was the m ost appropriate approach and, to the extent that it was not, to consider
alternative approaches”.48
45. Accordingly, the compliance Panel should have required the United States to establish the
project risk premium based on the risks associated with the A350XWB project itself , and in
light of the terms of each specific LA/MSF contract . Instead, the Panel acquiesced in the
United States’ approach, which purported to establish the existence of a “benefit” on the basis
of a single, undifferentiated project risk premium applied across two distinct LCA programmes,
launched six years apart, and eight distinct LA/MSF contracts, concluded over a period of
10 years.
46. The degree to which this approach required the Panel to gloss over differences between the
two di stinct LCA programmes and the eight distinct LA/MSF contracts is astonishing, and is
particularly glaring in light, once again, of the conceit of precision reflected in the
benchmarking results tabulated in the Panel’s Table 10. Even with the use of a sin gle,
undifferentiated project risk premium, to which the Panel made no adjustment whatsoever to
account for differences in the risk profiles of eight LA/MSF contracts concluded at different
points in time over a ten-year period, to finance the development of two distinct aircraft
launched six years apart, the Panel’s Table 10 results in nothing more than small “benefits”.
Those findings are sensitive to small changes in the project risk premium, and potential
changes in the result, from a finding that a pa rticular LA/MSF loan constitutes a subsidy, to a
finding that it does not.
47. In reaching its “benefit” findings, the Panel committed three sets of errors.
5.1 The Panel failed to establish a project -specific risk premium for A350XWB LA/MSF
based on the risks associated with the A350XWB programme49
48. The Panel failed to establish a project -specific risk premium for A350XWB LA/MSF based on
the risks associated with the A350XWB programme, and therefore erred in the application of
Article 1.1(b) of the SCM Agreement . F or distinct reasons, the Panel’s approach also
constitutes error under Article 11 of the DSU.
49. Beginning with the Panel’s error in the application of Article 1.1(b), the Appellate Body has
explained that a benchmark loan must be identified through “a progressive search ”, which
must begin by assessing the commercial loan that shares “as many elements as possible in
common with the investigated loan”, before progressing to less similar commercial loans. 50
The Panel failed to undertake a “ progressive search ” f or and to adopt the benchmark that
shared “as many elements as possible in common with” the A350XWB LA/MSF loans, and that
was most closely tailored to the risks associated with the A350XWB programme .51 In fact, the
Panel did not engage in any search, prog ressive or otherwise, to identify the project risk
premium. The Panel failed to do so despite the fact that it was well aware that there was a

47 See Appellate Body Report, EC – Large Civil Aircraft, para. 870 (summary by the Appellate Body of
the major concerns expressed by the original panel).
48 Appellate Body Report, EC – Large Civil Aircraft, para. 883 (emphasis added).
49 Panel Report, paras. 6.608, 6.610, 6.632 (Table 10), 6.633, 6.656, 6.1798, 6.1817, 7.1(c)(i),
7.1(d)(xiv), 7.1(d)(xv), 7.1(d)(xvii).
50 Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China), para. 486.
51 Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China), paras. 476, 486
(emphasis added). See also Appellate Body Report, US – Carbon Steel (India), para. 4.345.

more appropriate benchmark that was more closely tailored to the risks associated with the
A350XWB programme – that is, A350XWB risk -sharing supplier (“RSS”) contracts. The Panel
made other findings relating to RSS contracts for the A350XWB, demonstrating that it knew of
their existence. Moreover, the Panel evidently thought RSS financing was an appropriate
benchmark, because RSS contracts for the A380 served as the basis for the A380 project risk
premium that the Panel ultimately applied.
50. The Appellate Body has further explained that, when resort to a less similar commercial loan to
serve as the benchmark is necessary, adjustments must be made to ensure comparability with
the investigated loan.52 The Panel failed to make any adjustments to the project risk premium
developed for the A380 project, despite the Panel’s own findings of differences in risk between
the A380 project and the A350XWB project.
51. The Panel’s approach also constitutes error under Article 11 of the DSU. Paraphrasing the
Appellate Body’s guidance from the original proceedings, the compliance Panel did not assess
“whether the application of a{n A380 -based} constant project risk premium {as suggested by
the United States} was the most appropriate approach and, to the extent that it was not, to
consider alternative approaches ”53. Further, b y inappropriately d eviating from the approach
taken by the original panel in this regard, the compliance Panel committed another, separate
error under Article 11.
5.2 The Panel failed to establish similarity between (i) the risks involved in the
A350XWB project and the A350X WB LA/MSF contracts, and (ii) the risks involved in the
A380 project and the A380 LA/MSF contracts, and therefore failed to make an objective
assessment of the matter54
52. The Panel erroneously found that the project risk premium developed for the A380 project is a
suitable benchmark for the A350XWB project, on the basis that the risks posed by the A380
and the A350XWB projects were purportedly similar. However, the Panel’s finding that the
risks posed by the A380 and the A350XWB projects are similar is not based on an objective
assessment of the matter, as required under Article 11 of the DSU.
53. The Panel’s errors relate to its assessment of each of the three aspects of risk considered
relevant by the Panel to assess the similarity of the risk profiles of, res pectively, the A380 and
A350XWB projects.
5.2.1 Price of risk
54. The Panel found that the United States did not demonstrate the similarity of the price of risk at
the time of the provision of A380 and A350XWB LA/MSF. As a result, the Panel’s conclusion
that the risks (including the price of risk) of providing financing for the A380 project are
sufficiently similar to the risks of providing financing for the A350XWB project, is self -evidently
based on inconsistent reasoning and lacks sufficient evidentiary support.
5.2.2 Programme risk
55. The Panel next addressed programme risk, which consists of “development” risk and “market”
risk. From its finding that the A380 and A350XWB projects gave rise to different programme
risks, the Panel erroneously concluded that the projec ts bore similar programme risks. The
leap from “different” to “similar” programme risks was erroneous, because it was based on
insufficient support in the evidence, and was additionally not accompanied by a reasoned and
adequate explanation. More specifi cally, the Panel failed to reduce the differences in
programme risk to common terms that are relevant under Article 1.1(b), and that allow for the
comparison necessary to determine similarity. That is, the Panel failed to express the
differences in progra mme risks between the A380 and the A350XWB projects in terms of the
impact each project’s programme risks had on the market price that would be demanded by a
market lender as a risk premium to bear those risks.

52 Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China), para. 486.
53 Appellate Body Report, EC – Large Civil Aircraft, para. 883 (emphasis added).
54 Panel Report, paras. 6.487, 6.492, 6.527, 6.539, 6.542, 6.579, 6.595, 6.608, 6.609, 6.610, 6.632
(Table 10), 6.633, 6.656, 6.1798, 6.1817, 7.1(c)(i), 7.1(d)(xiv), 7.1(d)(xv), 7.1(d)(xvii).

56. The Panel’s also erred under Article 11 of the DSU in assessing the respective development
risks faced by each project. First, the Panel failed to account for differences in the mitigation
of development risks as between the A350XWB and the A380 projects. Specifically, to find
similarity between the development risks of each project, the Panel was forced to ignore its
own findings that, at the time the A350XWB contracts were signed, the development risk of
the A350XWB project was already mitigated to some extent, whereas the development risk of
the A380 was not. Second, the Panel made inconsistent findings in assessing the questions of
“benefit” and “adverse effects” from LA/MSF for the A35 0XWB, suggesting a lack of
even-handedness. Specifically, in its “benefit” assessment, the Panel emphasised the novelty
of the A350XWB project (which facilitated its “benefit” findings), whereas, in its assessment of
the “effects of the subsidies”, the Panel emphasised the continuity of the A350XWB project in
light of the A380 project (which facilitated its “ad verse effects” findings). The Panel did not
explain the reason for this disparate treatment of the evidence.
5.2.3 Contract risk
57. Finally, as regards contract risk , the Panel failed properly to compare the terms of the
A350XWB contracts to those of the A380 co ntracts. For several reasons, the Panel’s
comparison between the A350XWB and A380 LA/MSF contracts lacks a sufficient evidentiary
basis.
58. First, the Panel’s finding of similarity in risk -reducing terms between certain A380 LA/MSF and
A350XWB LA/MSF contracts is contradicted by the undisputed fact that the risk-reducing terms
in certain A350XWB LA/MSF contracts were more extensive than in any of the A380 LA/MSF
contracts. Second, the undisputed evidence shows that more A350XWB LA/MSF contracts
contained certain risk-reducing terms than was the case in the A380 LA/MSF contracts. Third,
and finally, undisputed evidence shows that risk -reducing terms in the A350XWB LA/MSF
contracts are more consequential than risk -reducing terms in the A380 LA/MSF contracts,
given that, according to the Panel, the A350XWB project would be exposed to a slightly higher
development risk than the A380 project.
59. Additionally, and again with regard to contract risks, the Panel failed entirely to compare the
terms of the A350XWB LA/MSF contracts to those of the RSS contracts for the A380, which
were used in the original proceedings to derive the project risk premium for the A380 LA/MSF
contracts. The reason is simple: the A380 RSS contracts do not form part of the record.
Without a proper examination of the terms of the A380 RSS contracts, the Panel could not
know whether the terms of the A350XWB LA/MSF contracts are dissimilar to the terms of the
A380 RSS contracts.
5.3 The Panel erroneously adopted a single project risk premium to benchmark all four
of the A350XWB LA/MSF loans55
60. The Panel erroneously found that a single project risk premium could be applied as a
benchmark for each of the four distinct LA/MSF contracts for the A350XWB. This constitutes
error in the application of Art icle 1.1(b) of the SCM Agreement . The Panel’s own factual
findings reveal that there are important differences in the terms of the four loans that affect
the risk profile – and hence the market price – of each loan. However, in selecting a single,
undifferentiated project risk premium, the Panel failed to consider, let alone adjust for, these
differences.
61. The Panel also failed to make an objective assessment of the matter, under Article 11 of the
DSU. Specifically, the Panel took inconsistent approaches to the identification of the corporate
borrowing rate component of its benchmark, and the project risk premium component of that
benchmark. Purportedly to avoid the risk of producing false positive or false negative subsidy
findings, the differences in timing between the conclusion of the various LA/MSF contracts
prompted the Panel to adopt a different corporate borrowing rate for each of the four
A350XWB LA/MSF contracts. 56 On the other hand, as regards the project risk premium
component of its benchmark, differences between the four A350XWB LA/MSF contracts did not

55 Panel Report, paras. 6.607, 6.608, 6.609, 6.610, 6.632 (Table 10), 6.633, 6.656, 6.1798, 6.1817,
7.1(c)(i), 7.1(d)(xiv), 7.1(d)(xv), 7.1(d)(xvii).
56 Panel Report, paras. 6.385-6.388.

prompt the Panel to adopt a different risk premium for each contract, despite a similar risk of
producing false subsidy findings.
6 THE PANEL ERRED IN I TS IDENTIFICATION OF THE APPROPRIAT E PRODUCT
MARKETS57
62. The European Union appeals the Panel’s finding, in paragraph 6.1411 of the Panel Report,
that:
the United States has demonstrated that it would be appropriate to evaluate the
merits of its claims of serious prejudice in this compliance dispute on the basis of the
following three separate product markets: (a) the product market for single -aisle
aircraft in which Airbus and Boeing sell the A320neo, A320ceo, 737MAX and 737ng
families of LCA; (b) the product market for twin -aisle aircraft i n which Airbus and
Boeing sell the A330, A350XWB, 767, 777 and 787 families of LCA; and (c) the
product market for VLA in which Airbus and Boeing sell the A380 and the 747.
63. This finding rests on several errors in the interpretation and application of Artic les 5 and 6.3 of
the SCM Agreement; separately, the Panel also failed to make an objective assessment of the
matter, under Article 11 of the DSU.
64. First, the Panel erred in interpreting the term “market” in Article 6.3 to require the placement
of two produc ts in the same product market based solely on the existence of competition
between those products, without regard to the nature or degree of the competitive
relationship. In other words, the Panel held that, for two products to be in the same product
market, it is not necessary “that they impose ‘significant competitive constraints’ on each
other or that those products are ‘closely competitive’”. 58 This interpretation undermines the
very concept of a “market” as envisaged in Article 6.3 of the SCM Agreement, and constitutes
interpretative error. That interpretative error also undermines the Panel’s identification of the
relevant product markets, and the adverse effects findings based thereon.
65. As the Appellate Body explained in US – Upland Cotton , the ordin ary meaning of the word
“market” is “the area of economic activity in which buyers and sellers come together and the
forces of supply and demand affect prices”. 59 The Appellate Body also clarified, in the original
proceedings in this dispute, that “the sco pe of the relevant product market in any given case
will depend on the nature and degree of competition between the products of the complaining
Member and the allegedly subsidized products of the responding Member”. 60 It would be
erroneous to group product s into the same product market based solely on the existence of
competition between them, without consideration of the “nature and degree” of the
competitive relationship.
66. In the original proceedings, the Appellate Body referred to the “sma ll but signifi cant and
non-transitory increase in prices” or “SSNIP” test to locate the proper balance, in the product
market definition, between the complete absence of competitive constraints
(or substitutability), on the one hand, and perfect substitutability, on the other.61 This
conceptual tool underscores the proposition that the mere existence of competition between
two products is insufficient to group them into the same product market. Instead, two
products may properly be placed in the same market where the “n ature and degree of
competition” between the products reveals that they exercise “ significant competitive
constraints” on one another. While circumstances may undermine the ability to apply the
SSNIP test in a given case, the Appellate Body’s choice of th is conceptual tool supports the
proposition that product markets should be defined on the basis of “significant competitive
constraints”, and not merely the existence of competition.

57 Panel Report, paras. 6.1210, 6.1211, 6.1236, 6.1280, 6.1289, 6.1292, 6.1305, 6.1320, 6.1348,
6.1382, 6.1362, 6.1409, 6.1416, 7.1(d)(xi).
58 Panel Report, para. 6.1211.
59 Appellate Body Report, US – Upland Cotton, para. 408.
60 Appellate Body Report, EC – Large Civil Aircraft, para. 1123.
61 Appellate Body Report, EC – Large Civil Aircraft, footnote 2468, citing M. Motta, Competition Policy:
Theory and Practice, pp. 102, 103.

67. The Panel’s approach to identifying product markets based on the mere ex istence of
competition would produce unworkable product market definitions that make identifying the
effects of subsidies virtually impossible, thereby undermining the utility of the very exercise of
demarcating product markets for purposes of a serious pr ejudice assessment. For example,
under the Panel’s product market standard, a product market could readily be composed of,
for example, small regional aircraft, large regional aircraft, single -aisle aircraft, twin -aisle
aircraft, very large aircraft, and may even include other means of transport.
68. Second, should the Appellate Body find that the Panel did not err in its interpretation of the
term “market” in Article 6.3, and instead agree that two products belong in the same product
market as long as competi tion exists between those products (regardless of the nature or
degree of that competitive relationship), the Panel failed in its application of Articles 5(c) and
6.3 to the facts at hand. 62 Specifically, on the facts, the Panel’s product market standard
should have led inexorably to the conclusion that all LCA fall in the same single product
market. The Panel’s factual findings reveal that competition exists across the product
spectrum covered by the US challenge, such that application of the Panel’s own standard
should have led it to find a single product market. In fact, in concluding its finding on product
markets, the Panel emphasised that “important competitive relationships may also exist
between pairings or combinations of aircraft across two, or e ven all three, of the product
markets”.63 Thus, even assuming that the legal standard identified by the Panel was correct,
quod non , the Panel erred in the application of that standard. This error undermines the
Panel’s identification of the relevant prod uct markets, and the adverse effects findings based
thereon.
69. Third, and finally, the Panel’s failure to test its erroneous product market standard against the
competitive dynamics between products that the United States alleged to fall in different
product markets constitutes a failure, under Article 11 of the DSU, to make an objective
assessment of the matter. 64 The Panel confined its analysis to an enquiry whether there
existed some competitive relationship between the aircraft placed by the United States within
each of the three product markets it alleged, without also enquiring whether there existed a
competitive relationship between aircraft that the United States placed into separate product
markets. For instance, on the sole basis that the United Sta tes alleged them to be in different
product markets, the Panel neglected altogether to examine whether the A321neo exerts
competitive constraints on the 767, or whether the 777 -300ER or the A350XWB -1000 exert
competitive constraints on the 747 -8. In so do ing, just as in the original proceedings, the
compliance Panel took an undiscerning approach to identifying the product markets,
uncritically accepting the markets proposed by the United States.
70. In these circumstances, the European Union requests the Appellate Body to reverse the Panel’s
product market findings. Having erred in the identification of the product markets at issue,
these findings must be reversed, and with them the findings of displacement, impedance and
significant lost sales that the Panel made on the basis of its erroneously identified product
markets.
7 NON-SUBSIDIZED LIKE PRODUCT65
71. The Panel erred in the section of its report that deals with the subsidization of the like product.
The Panel should have made an objective assessment of the US claim and the EU arguments
under Articles 6.3(b) and 6.4, taking into account the facts and evidence submitted by the
parties, and taking into account the Appellate Body’s guidance that Article 6.4 provides context
for the interpretation and application of Article 6.3(b). The Panel should have assessed not
only the EU argument that any subsidization of the like product precludes or defeats the US
claim (the original “clean hands” argument) but also the novel interpretative proposition
advanced by the EU to the effect that the compliance Panel was bound to take such
subsidization into account in its assessment of causation (the “causation” argument). The

62 Panel Report, paras. 6.1292, 6.1305, 6.1320, 6.1348, 6.1382, 6.1362, 6.1409, 6.1416, 7.1(d)(xi).
63 Panel Report, para. 6.1416.
64 Panel Report, paras. 6.1292, 6.1305, 6.1320, 6.1348, 6.1382, 6.1362, 6.1409, 6.1416, 7.1(d)(xi).
65 Panel Report, paras. 6.1125-6.1138, 6.1154, 6.1798, 6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(x),
7.1(d)(xiv)-7.1(d)(xvii), 7.2.

Panel was also bound to take into account the multilateral determination in DS353 that Boeing
LCA are subsidized to the tune of several billion dollars.
72. Thus, the Panel erred in stating that the EU arguments were “essentially the same” as in the
original proceedings, and erred in reducing the matter to two questions: whether or not there
was a new matter; an d whether or not there were cogent reasons. The Panel further erred in
its assessment of whether or not there was a new matter, because it failed to take into
account changes in the law and facts, erred in the interpretation of the term “matter” in Articl e
11 of the DSU, and failed to make an objective assessment. The Panel also erred in its
assessment of whether or not there were cogent reasons, including by failing to make an
objective assessment under Article 11 of the DSU.
73. Accordingly, the European Un ion requests the Appellate Body to reverse the Panel's findings
that relate to or rely on its findings with respect to the subsidized like product, and complete
the legal analysis with respect to the interpretation of Articles 6.3(b) and 6.4. The European
Union further submits that the Appellate Body cannot complete the analysis with respect to the
US claims of displacement or impedance. The European Union also asks the Appellate Body to
take these matters into account when considering and reversing other aspects of the Panel’s
findings under Article 6, and specifically Articles 6.3(a) and 6.3(c).
8 THE PANEL ERRED IN F INDING THAT THE LA/M SF LOANS ARE A GENUI NE AND
SUBSTANTIAL CAUSE OF ADVERSE EFFECTS RELA TED TO AIRBUS’ A320, A330, A380
AND A350XWB FAMILIES OF LCA66
74. The European Union appeals several errors in the Panel’s causation-related findings.
75. First, the Panel erred in finding that, despite the passage of time and events that occurred
during that time, “the direct and indirect effects of the pre-A350XWB LA/MSF subsidies
continue to be a genuine and substantial cause of the present -day market presence of the
A320, A330 and A380 families”. 67 This finding is based on a “but for” approach to causation
that, in the circumstances of the present disp ute, was incapable of taking into account the
passage of time, and events that occurred during that time, including the expiry of most of the
pre-A350XWB subsidies, resulting in error in the interpretation of Article 5(c) of the
SCM Agreement.
76. The Panel acknowledged the Appellate Body’s guidance on the relevance of the passage of
time and events that occurred during that time – in particular, that the effect of any subsidy
must “diminish{} and eventually come to an end”. 68 However, under the Panel’s appro ach to
causation, adverse effects continue to be attributable to the subsidy for as long as the
subsidised product exists (as well as any subsequent products manifesting “learning”, “scope”
or “financial” effects from the subsidised product), since the sub sidy will continue to be the
necessary “but for” cause of its market presence. This enquiry was, therefore, ill -suited and
insufficient to determine whether, at present, and taking into account the passage of time and
events that occurred over that time, including the expiry o f the subsidies and massive
non-subsidised investments by Airbus, the subsidies continue to be a “genuine and
substantial” cause of adverse effects.
77. The Panel’s “but for” approach to causation, coupled with its approach to the inter pretation of
Article 7.8, created an anomalous situation in which it is nearly impossible for a Member to
bring itself into compliance with the recommendations and rulings of the DSB in relation to an
actionable subsidy. Under the Panel’s approach to Arti cle 7.8, compliance cannot be achieved
through withdrawal of the subsidy, though expressly recognised as an option to achieve
compliance, unless accompanied by the removal of adverse effects. And under the Panel’s
“but for” approach, the finding from the original proceedings that the subsidies were
historically a “necessary” cause of adverse effects is extended indefinitely, meaning that the
causal link to alleged adverse effects does not “diminish{} and eventually come to an end”.

66 Panel Report, paras. 6.1515, 6.1527, 6.1534, 6.1774, 7.1(d)(xii)-7.1(d)(xiii).
67 Panel Report, para. 6.1534.
68 Panel Report, para. 6.1487, quoting Appellate Body Report, EC – Large Civil Aircraft,
paras. 1236-1238.

78. Additionally, the European Union appeals the Panel’s error in the application of Article 5(c) and
7.8 of the SCM Agreement, by failing to examine whether Airbus’ non -subsidised investments
diluted the causal link between the subsidies and the alleged adverse effects related to A irbus’
A320 and A330 families of LCA, such that the subsidies are no longer a “genuine and
substantial” cause of present adverse effects.69 Having determined that the subsidies were the
historical “necessary” cause of the market presence of these aircraft, the Panel outright
precluded the possibility that these investments could ever have an impact on the existence of
a “genuine and substantial” present causal link. To the Panel, the non -subsidised post-launch
investments were merely evidence that the adve rse effects of the subsidies persisted, because
“but for” the subsidies, the programmes into which the non-subsidised investments were made
would not have existed in the first place.70
79. Second, the Panel may have implied that LA/MSF for the A380 resulted in “direct effects”.71 To
the extent the Panel did make such a finding, it constitutes error under Article 11 of the DSU.
The Panel defined the term “direct effects” as “the effects of any given LA/MSF loan on Airbus’
ability to launch and bring to market th e particular model of Airbus LCA specifically funded by
that LA/MSF loan”. 72 Having (i) expressly found that A380 LA/MSF was “not critical to {the}
very existence” of the A380, 73 and (ii) not having found that absent A380 LA/MSF, Airbus
would have delayed the launch of the A380, or that the A380 would have been any different in
technology, the Panel lacked an evidentiary basis to find that LA/MSF for the A380 resulted in
“direct effects”.
80. Third, in attributing the market presence of the A350XWB to LA/MSF, th e Panel erred in the
application of Article 5, and under Article 11 of the DSU. Specifically, the Panel appears to
have attributed the market presence of the A350XWB to “indirect effects” of LA/MSF for
previous aircraft, including LA/MSF for the A380.74 Moreover, certain of the Panel’s statements
could be read to imply that the market presence of the A350XWB is attributable to “direct
effects” of LA/MSF for the A350XWB.75
81. The Panel’s attribution of the market presence of the A350XWB to the “indirect effects ” of the
LA/MSF for the A380 constitutes error in the application of Article 5(c). The Panel’s finding
that A380 LA/MSF was “not critical to {the} very existence” 76 of the A380 precludes a finding
of “direct effects” from that subsidy on the existence of the A380. In these circumstances, any
“learning effects”, “scope and scale effects” or “financial effects” for the A350XWB associated
with the A380 would have existed even absent A380 LA/MSF, and are not attributable to those
loans. Thus, as A380 LA/MSF d id not result in “direct effects” for the A380, those loans were
logically incapable of resulting in “indirect effects” on later LCA such as the A350XWB. Yet, the
Panel appears to have erroneously included A380 LA/MSF in the aggregated group of subsidies
that had “indirect effects” on the launch and market presence of the A350XWB.77
82. To the extent that the Panel attributed the market presence of the A350XWB to “direct effects”
from LA/MSF for the A350XWB, the Panel’s finding rests on its assertion that “without
A350XWB LA/MSF, the Airbus company that actually existed could have pursued such a
programme only by a narrow margin, with a high likelihood that it would, to some degree,
have had to make certain compromises with respect to the pace of the programme a nd/or the
features of the aircraft”.78 This single sentence – which is, incredibly, the concluding sentence
in the concluding paragraph of a 182 -paragraph section of the Panel Report dedicated to
assessing the effects of A350XWB LA/MSF – is the sole basis on which the Panel appears to
have found “direct effects” from A350XWB LA/MSF on the launch and market presence of the
A350XWB.

69 Panel Report, paras. 6.1527, 6.1534, 6.1774, 7.1(d)(xii)-7.1(d)(xiii).
70 Panel Report, para. 6.1525.
71 Panel Report, para. 6.1507.
72 Panel Report, para. 6.1492.
74 Panel Report, paras. 6.1747, 6.1771, 6.1773, 7.1(d)(xiii).
75 Panel Report, paras. 6.1717, 7.1(d)(xiii).
77 Panel Report, paras. 6.1771, 6.1773, 7.1(d)(xiii).
78 Panel Report, paras. 6.1717, 7.1(d)(xiii).

83. The Panel’s assertion that, without A350XWB LA/MSF, there was a “high likelihood” that Airbus
would have had to “make certain compromises” to the timing and features of the aircraft,
enjoys no support whatsoever in the 182 -paragraph section of the Panel Report dedicated to
assessing the effects of A350XWB LA/MSF. Indeed, the Panel does not cite a single piece of
evidence to support such a finding; nor does it otherwise provide reasoning in support of any
such finding. In fact, the Panel’s speculation is contradicted by a number of its own factual
findings, which collectively demonstrate that Airbus would not have made compromise s on the
timing or features of the A350XWB. 79 Thus, the Panel’s finding of “direct effects” for the
A350XWB constitutes error under Article 11 of the DSU.
84. Fourth, and finally , the Panel erred in its application of the requirement that there be a
“genuine and substantial” causal link, under Article 5(c) and 6.3 of the SCM Agreement by
failing to account for, in its causation analysis, the differences in the degree of competition
between pairings of aircraft, and market-specific and sale-specific non-attribution factors.80
85. The Panel clarified that “it {was} not {the Panel’s} view that the degree of competition
existing within each of {the} markets will be identical between all pairings or combinations of
aircraft”.81 The Panel also acknowledged that “where the evidence shows that the competitive
relationship {between two products} is not direct and ‘at most, indirect or remote’, this must
be properly taken into account in the {subsequent adverse effects} analysis ”.82 Yet, the Panel
failed to account for the differences in the degree of competition between relevant LCA in
assessing the US claims of displacement, impedance and lost sales.
86. Similarly, in the context of displacement, impedance and lost sales, the Panel failed to account
for the market -specific and sale -specific non -attribution factors that the European Union
demonstrated as causing (or contributing to) the observed market phenomena. Having
determined that, historically, the LA/MSF subsidies were the “ne cessary” cause of the market
presence of certain Airbus aircraft, the Panel posited tha t any further discussion of
non-attribution factors was “obviously” irrelevant. 83 In so doing, the Panel erred in its
application of the requirement that there be a “gen uine and substantial” causal link, under
Article 5(c) and 6.3 of the SCM Agreement
9 THE PANEL ERRED IN F INDING “DISPLACEMENT AND/OR IMPEDANCE” IN VARIOUS
COUNTRY AND PRODUCT MARKETS84
87. The Panel’s findings of “displacement and/or impedance” rest on three sets of errors.
88. First, the Panel made undifferentiated findings of “displacement and/or impedance” with
respect to each of the country and product markets at issue, without clarifying whether it had
found, for a particular country and product market, both displacement and impedance, or
instead one or the other of these two distinct forms of adverse effects. Articles 6.3(a) and
6.3(b) employ the words “displace” and “impede”, separated by the conjunction “or”, which
confirms that displacement and impedance ar e two distinct forms of serious prejudice.
Indeed, the Appellate Body has defined the term “displace” to connote a “substitution effect”,85
and the term “impede” to connote “obstructed” or “hindered” imports/exports. 86 The
Appellate Body also clarified, in US – Large Civil Aircraft, that “‘displacement’ and ‘impedance’
are ... not interchangeable concepts” .87 The Panel’s undifferentiated findings of “displacement
and/or impedance” constitute error in the interpretation of Articles 6.3(a) and 6.3(b), and
amount to treating displacement and impedance as interchangeable concepts.

79 Compare Panel Report, para. 7.1717 with Panel Report, paras. 6.1542-6.1544, 6.1546, 6.1547,
6.1548, 6.1555, 6.1569, 6.1572, 6.1579.
80 Panel Report, paras. 6.1798, 6.1817, 6.1838, 6.1846, 6.1847, 7.1(d)(xiv)-7.1(d)(xvii).
81 Panel Report, para. 6.1416.
83 Panel Report, para. 6.1814.
84 Panel Report, paras. 6.1817, 7.1(d)(xiv)-7.1(d)(xv).
85 Appellate Body Report, EC – Large Civil Aircraft, para. 1160. See also Appellate Body Report,
86 Appellate Body Report, EC – Large Civil Aircraft, para. 1161. See also Appellate Body Report,
US – Large Civil Aircraft, paras. 1071, 1086.
87 Appellate Body Report, US – Large Civil Aircraft, para. 1071. See also Appellate Body Report,
EC – Large Civil Aircraft, paras. 1160-1162.

89. Second, assuming, arguendo, that the Panel’s findings of “displacement” apply to each country
and product market at issue, the European Union demonstrates that all of the Panel’s fin dings
of “displacement” are in error.
90. Properly interpreted, the term “displacement” connotes a substitution effect. The Appellate
Body has clarified that in deciding a claim of displacement, a panel must “assess whether this
phenomenon is discernible by examining trends in data relating to export volumes and market
shares over an appropriately representative period”. 88 The Panel erroneously sought to
distinguish the Appellate Body’s guidance by postulating that it pertained solely to a “two-step”
analysis of causation, and not to the type of “unitary” analysis that the Panel undertook. The
Panel’s application of the law to the facts confirms that the Panel interpreted Articles 6.3(a)
and 6.3(b) to allow a finding of displacement without any engagement wi th the sales volume
and market share data, and without a finding of clearly discernible and identifiable declining
trends in sales volume or market shares for each of the country and product markets at issue.
This constitutes error in the interpretation of Articles 6.3(a) and 6.3(b) of the SCM Agreement.
91. The Panel additionally erred in the application of Articles 5(c), 6.3(a) and 6.3(b) and 7.8 by
effectively confining its analysis to two data points (annual data for 2012 and 2013), which, as
the Appellate Body clarified in US – Large Civil Aircraft, “by any measure, cannot constitute a
trend”.89
92. The Panel further erred in the application of Articles 5(c), 6.3(a) and 6.3(b) and 7.8 in making
findings of displacement entirely divorced from the data. The Pa nel failed to engage with the
data, to determine whether it revealed a “discernible” or “clear” trend of a “substitution effect”
in the markets at issue. In several instances, the Panel’s findings of displacement cover
markets where Boeing’s market share increased over the period under consideration,
evidencing the exact opposite of a substitution effect.
93. Third, assuming, arguendo, that the Panel’s findings of “impedance” apply to each country and
product market at issue, the European Union demonstrates th at all of the Panel’s findings of
“impedance” are in error.
94. Contrary to the meaning of the term “impede”, and the Appellate Body’s guidance, the Panel
interpreted Articles 6.3(a) and 6.3(b) to support a finding of impedance without any
engagement with th e sales volume and market share data, and without a finding of clearly
discernible and identifiable trends in sales volume or market shares for each of the country
and product markets at issue. This constitutes error in the interpretation of Articles 6.3(a) and
6.3(b).
95. Additionally, the Panel erred in the application of Articles 5(c), 6.3(a) and 6.3(b) by effectively
confining its analysis to two data points (annual data for 2012 and 2013), and in making
findings of impedance that are entirely divorced from the data.
10 CONSIDERATIONS THAT APPLY WERE THE APPEL LATE BODY TO ATTEMPT TO
COMPLETE THE ADVERSE EFFECTS ANALYSIS
96. Having set out the bases on which the Appellate Body should reverse (i) the Panel’s findings
with respect to the withdrawal of subsidies, unde r Article 7.8 of the SCM Agreement , and
(ii) the Panel’s causation findings, under Articles 5 and 6.3 of the SCM Agreement , the
European Union addresses considerations that would apply were the Appellate Body to attempt
to complete the analysis regarding the United States’ assertion of adverse effects.
97. The Panel employed the tools of aggregation and cumulation to undertake a collective
assessment of the effects of LA/MSF and non -LA/MSF subsidies. Specifically, the Panel found
that the aggregated group of LA/MSF subsidies is a “genuine and substantial” cause of adverse

88 Appellate Body Report, US – Large Civil Aircraft, para. 1071.
89 Appellate Body Report, US – Large Civil Aircraft, para. 1087.

effects, and then cumulated the effects of the non -LA/MSF subsidies, which it found to be a
“genuine” cause of adverse effects.90
98. Should the Appellate Body reverse the Panel’s interpretation of Article 7.8 or its causation
findings, the basket of subsidies subject to the Appellate Body’s analysis of the adverse effects
asserted by the United States will be different from the basket considered by the Panel. In the
reconstituted basket, there wil l no longer be a single LA/MSF subsidy or an aggregated group
of LA/MSF subsidies to serve as a “genuine and substantial” cause of adverse effects. The
Panel’s factual findings provide no basis for a conclusion that anything short of the entire
group of L A/MSF subsidies considered by the Panel is a “genuine and substantial” cause of
adverse effects.
99. Without an “anchor” subsidy (or aggregated group of subsidies) that has been found to be a
“genuine and substantial” cause of adverse effects, cumulation will no longer be an appropriate
tool for the collective assessment of the effects of the LA/MSF and non -LA/MSF subsidies. Nor
can the non-LA/MSF subsidies be aggregated with the LA/MSF subsidies, given the differences
in the “design, structure and operation” of these measures. Neither aggregation nor
cumulation is appropriate for the collective assessment of the effects of the non -withdrawn
LA/MSF and non-LA/MSF subsidies, should the Appellate Body seek to complete the analysis.
100. While the European Union does not believe that the inapplicability of aggregation and
cumulation would preclude a collective assessment of the effects of the subsidies, the
European Union believes that the Appellate Body would be unable to complete the analysis to
make any findings of adverse effects properly attributable to any non -withdrawn subsidies for
other reasons:
a. The Panel erred in its identification of the relevant product markets. 91 In doing so, the
Panel failed to undertake any examination of the competitive dynamic between p roducts
that the United States alleged to be in different product markets. The Panel’s failure in
this regard renders the Panel Report devoid of factual findings that would allow the
Appellate Body to complete the analysis by identifying the appropriate p roduct markets.
Nor are there undisputed facts of record to enable the identification of appropriate
product markets by the Appellate Body.
b. The Panel erroneously failed to consider whether the United States brought its claim in
respect of a “non -subsidized like product”, within the meaning of Article 6.4 of the
SCM Agreement.92 There are no Panel findings or undisputed facts of record that would
allow the Appellate Body to identify which, if any, of the Boeing aircraft in respect of
which the United States alleges adverse effects is “non-subsidized”.
c. In its causation analysis, the Panel failed to account for the passage of time and events
that occurred during that time. 93 There are no Panel findings or undisputed facts of
record that would allow the Appellate Body to account for these factors in completing the
analysis.
d. The nature of the adverse effects analysis advocated by the United States, and accepted
by the Panel, resulted in an absence, from the record, of evidence necessary to assess
properly the causal link between a reconstituted basket of subsidies and any adverse
effects. The United States did not advance any argument or evidence that could have
assisted the Panel, or that could assist the Appellate Body, in assessing whether a
reconstituted basket of subsidies, short of even one of the subsidies that the United
States included in its basket, would still be a “genuine and substantial” cause of any
adverse effects.
e. The re-constitution of the basket of subsidies at issue would require properly accounting
for the effects of those subsidies that are withdrawn, and therefor e excluded from the

90 Panel Report, paras. 6.1838, 6.1846, 6.1847, 7.1(d)(xvii).
91 Section 6 , above.
92 Section 7 , above.
93 Section 8 , above.

basket of subsidies at issue, as non-attribution factors. There are no Panel findings or
undisputed facts of record that would allow such an exercise by the Appellate Body.
f. With respect to claims of displacement and impedance, the Pane l failed to identify, or
even look for, clear and discernible trends that are capable of evidencing displacement
or impedance.94 While the Panel tabulated the volume and market share data pertaining
to two annual data points in its Report, two data points are insufficient to constitute a
trend. As for data for the years preceding 2011, there exist no Panel findings or
undisputed facts of record that speak to either the existence of trends, or the data based
on which such trends are to be ascertained.
g. In assessing displacement, impedance and lost sales, the Panel failed to account for the
closeness of competition and substitutability between products that it placed in the same
product market, based solely on the existence of competition, without regard to th e
nature or degree of that competitive relationship. 95 There are no Panel findings or
undisputed facts of record that would allow such an exercise by the Appellate Body.
h. In the context of displacement, impedance and lost sales, the Panel erroneously failed to
examine the market -specific and sale -specific non-attribution factors that the European
Union demonstrated caused or contributed to causing the observed market
phenomena.96 There are no Panel findings or undisputed facts of record that would allow
the Appellate Body to account for these factors in an attempt to complete the analysis.
11 CONCLUSION
101. For the reasons set out above, the European Union requests that the Appellate Body reverse
or modify the findings and conclusions addressed in this Appellant’s Submission.

94 Section 9 , above.
95 Section 9 , above.
96 Section 9 , above.

ANNEX B-2
EXECUTIVE SUMMARY OF THE UNITED STATES' OTHER APPELLANT'S SUBMISSION
1. If the Appellate Body were to reverse the Panel and find that the passive expiry of LA/MSF
subsidies could satisfy the obligation under Article 7.8 in at least some cases, then the
United States conditionally appeals the Panel ’s separate finding s that the ex ante lives of the
pre-A380 LA/MSF subsidies passively “expired” prior to December 1, 2011.
2. In line with the Appellate Body’s guidance in EC – Large Civil Aircraft , the period in which a
benefit exists should be based on an ex ante assessment of factors such as the nature,
amount, and projected use of the challenged subsidy. If at the time of grant, the evidence
indicates that the grantor expects the benefit to flow over a period whose length is defined to
be contingent on some other variable event, then logically the life of the subsidy should be
measured accordingly.
3. Evidently, the Panel assumed tha t the ex ante life of the subsidies must be expressed as a
fixed number. It erred by focusing on the wrong expectations. It sought to retrospectively
project an expected life to each aircraft program. The Panel failed to recognize that, when
Airbus acce pted a contingent liability and the governments agreed to make payments
contingent, they expected the benefit of below-market repayments to last for a variable period
defined by external factors.
4. In addition, the United States raises an appeal regarding a legal interpretive question with
respect to Article 3.1(b). The United States demonstrated, and the EU did not contest, that
French, German, Spanish, and UK LA/MSF is each conditioned on the production of goods in
the grantor’s territory to be used by Ai rbus in the manufacture of the A350 XWB. The Panel
found that subsidies conditioned on the domestic production of inputs to be used in the
manufacture of the A350 XWB are not prohibited under Article 3.1(b). The Panel determined
that the contingencies in the A350 XWB LA/MSF contracts “ensure that the member States are
subsidizing a domestic producer. Article 3.1(b), therefore, does not discipline them.”
5. Under a competing interpretation also under consideration in a separate dispute, where a
subsidy is co ntingent on domestic production of a good that is an input into a manufacturing
process, and substituting an imported version result in the loss of an entitlement to the
subsidy, the subsidy is contingent on the use of domestic over imported goods. To be clear,
the United States considers this is not the best interpretation. However, the United States has
an interest in ensuring that the same legal approach is applied in both proceedings.
6. Moreover, should the Appellate Body determine that this competing interpretation is indeed
correct, there is no question that the Panel erred in not finding a violation of Article 3.1(b).
Further, applying the competing interpretation to the undisputed facts and findings of this
proceeding, the Appellate Body would be able to complete the analysis and conclude that all
four instances of A350 XWB LA/MSF breach Article 3.1(b).
7. The competing interpretation – in contradiction to the interpretation adopted by the Panel – is
as follows: if (i) a subsidy is granted to a dome stic producer conditional on the domestic siting
of production activities to produce a domestic input in an industrial process, and (ii) a
substitution of imported goods for these inputs would result in the producer’s loss of the
entitlement to the subsidy , then the subsidy is contingent on the use of domestic over
imported goods, and therefore is inconsistent with Article 3.1(b). In addition, the competing
interpretation of Article 3.1(b) assumes that any good completed in a domestic territory is
“domestic” for purposes of Article 3.1(b), without the need to examine the significance of the
operations undertaken in the domestic territory, the proportion of foreign content contained in
the good, rules of origin, or any other considerations.
8. If the goods th at Airbus must use to manufacture the A350 XWB are required to be produced
in the EU, then the goods are “domestic goods” and therefore Airbus is required to use
domestic over imported goods to receive the subsidy.

9. The Panel, however, found that this logic reflected an improper interpretation of Article 3.1(b).
Critical to the Panel’s finding was the need to interpret Article III of the GATT 1994 and
Article 3.1(b) of the SCM Agreement consistently. The Panel found that a review of both
provisions “sugges ts that the act of granting subsidies to firms so long as they engage in
domestic production activities, without more, should not be equated to making those subsidies
contingent on the use of domestic over imported goods and hence prohibited.”
10. This raise s a threshold interpretive question that the Appellate Body has yet to consider.
Where a subsidy is contingent not only on the production of a finished good, but is also
contingent on the production, in the grantor’s territory, of intermediate goods for use as inputs
(or goods used to produce other goods, i.e., instrumentalities of production) – which are then
presumed to be “domestic” – in manufacturing the downstream good, is the subsidy in breach
of Article 3.1(b)? Arguably, the subsidy could be viewed as contingent on the use of a
domestic good because using an imported good in place of the domestic good would result in a
loss of the entitlement to the subsidy.
11. If the Appellate Body considers that this “competing interpretation” of Article 3.1(b) – which is
also under consideration in US – Conditional Tax Incentives for Large Civil Aircraft – is correct,
then the Panel erred.
12. Each instance of LA/MSF for the A350 XWB is conditioned on the domestic siting of production
activities for goods to be used by Airbus in the manufacture of the A350 XWB, and a
counterfactual substitution of imported versions of these goods would result in Airbus’s loss of
the entitlement to the LA/MSF. The United States reviews below the undisputed facts from
each of the LA/MSF contracts containing the contingencies and other relevant evidence.
13. France granted LA/MSF for the A350 XWB contingent on Airbus fulfilling certain requirements
contained in the French A350XWB Protocole that necessitate the use of domestic goods to
manufacture the A350 XWB. If the Appellate Body determines that the competing
interpretation of Article 3.1(b) is correct, the undisputed facts establish that the subsidy is
contingent on the use of domestic over imported goods.
14. Germany granted LA/MSF for the A3 50 XWB contingent on Airbus fulfilling certain
requirements that necessitate the use of domestic goods to manufacture the A350 XWB.
Therefore, if the Appellate Body determines that the competing interpretation of Article 3.1(b)
is correct, the undisputed facts establish that the subsidy is contingent on the use of domestic
over imported goods.
15. Spain granted LA/MSF for the A350 XWB contingent on Airbus fulfilling certain requirements
contained in the Spanish A350XWB Convenio that necessitate the use of dom estic goods to
manufacture the A350 XWB. Therefore, if the Appellate Body determines that the competing
interpretation of Article 3.1(b) is correct, the undisputed facts establish that the subsidy is
contingent on the use of domestic over imported goods.
16. The UK granted LA/MSF for the A350 XWB contingent on Airbus fulfilling certain requirements
contained in the UK A350XWB Repayable Investment Agreement that necessitate the use of
domestic goods to manufacture the A350 XWB. Therefore, if the Appellate Bod y determines
that the competing interpretation of Article 3.1(b) is correct, the undisputed facts contained in
the UK A350XWB Repayable Investment Agreement establish that the subsidy is contingent on
the use of domestic over imported.

ANNEX B-3
EXECUTIVE SUMMARY OF THE UNITED STATES' APPELLEE'S SUBMISSION
I. INTRODUCTION AND EXECUTIVE SUMMARY
1. Before launching into a point -by-point rebuttal of the errors in the European Union’s (“EU”)
appeal of the Panel’s findings, it is useful to recall how, after 12 years of WTO dispute
settlement, we have arrived at this point. The United States requested c onsultations in 2004
regarding the EU’s massive subsidization of its large civil aircraft industry. In 2010, the
original panel issued its report finding that the EU violated its obligations under Articles 5 and
6.3 of the Agreement on Subsidies and Countervailing Measures (“SCM Agreement”) not to use
subsidies so as to cause adverse effects to U.S. interests. The Appellate Body upheld the
Panel’s ultimate finding in 2011. 1 The Dispute Settlement Body (“DSB”) adopted its
recommendations and rulings in this dispute on June 1, 2011.2
2. The key measures, and the ones most central to the original panel and the Appellate Body
findings, were approximately USD 15 billion in subsidized lending in the form of Launch Aid
“LA/MSF” provided by the French, German, Spani sh, and U.K. governments to each and every
Airbus large civil aircraft (“LCA”) development program: the A300/310, A320, A330/340,
A340-500/600, and the A380.3 The adverse effects caused by these and other subsidies were
even greater – more than 300 lost aircraft orders worth tens of billions of dollars and displaced
exports to seven major country markets in the 2001 -2006 period alone.4 The subsidies found
by the original panel and the Appellate Body were unprecedented, both in terms of their
immensity and their harmful market effects. As the original panel found:
Given the amount of funding transferred to Airbus under the individual LA/MSF
contracts, and in the light of the formidable risks associated with the LCA business and
the learning curve effects t hat are necessary to successfully participate in this sector,
we have found that it would not have been possible for Airbus to have launched all of
these models, as originally designed and at the times it did, without LA/MSF. Even
assuming this were a pos sibility, and that Airbus had actually been able to launch
these aircraft relying on only market financing, the increase in the level of debt Airbus
would have accumulated over the years would have been massive.5
In confirming the original panel’s findings , the Appellate Body concluded that “{w}ithout 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.”6
3. The original pa nel recommended that “the Member granting each subsidy found to have
resulted in such adverse effects ‘take appropriate steps to remove the adverse effects or . . .
withdraw the subsidy.” 7 In line with Article 19.1 of the Understanding on Rules and
Procedures Governing the Settlement of Disputes (“DSU”), the Appellate Body recommended
further that “the DSB request the European Union to bring its measures, found in this Report,

1 EC – Large Civil Aircraft (AB), para. 1416.
2 Minutes of Meeting Held in the Centre William Rappard on 1 June 2011, WT/DSB/M/297, para. 28
(11 July 2011).
3 See, e.g., EC – Large Civil Aircraft (Panel), para. 7.525 (finding “there is no doubt that all of the
challenged LA/MSF contracts may be characterised as unsecured loans granted to Airbus on back-loaded and
success-dependent repayment terms, at below-market interest rates, for the purpose of developing various
new models of LCA”); US First Written Submission, para. 353.
4 The original panel found, and the Appellate Body confirmed, that Boeing lost sales involving 342 firm
orders. EC – Large Civil Aircraft (Panel), paras. 7.1803-7.1832; EC – Large Civil Aircraft (AB), para. 1414(p).
The total value of these lost orders amounts to many billions of dollars by any reasonable calculation. The
Appellate Body found displacement in the following markets: in the single-aisle product market in Australia
and in the single-aisle and twin-aisle product markets in the European Communities, China, and Korea.
EC – Large Civil Aircraft (AB), para. 1414(p).
5 EC – Large Civil Aircraft (Panel), para. 7.1948.
6 EC – Large Civil Aircraft (AB), para. 1264.
7 EC – Large Civil Aircraft (Panel), para. 8.7 (ellipsis in original).

and in the Panel Report as modified by this Report, to be inconsistent with the
SCM Agreement, into conformity with its obligations under that Agreement.” 8 The DSB
adopted the reports of the panel and the Appellate Body. 9 Under Article 7.9 of the SCM
Agreement, if the EU did not comply with the DSB’s recommendations within six month s, the
United States could seek DSB authorization to take countermeasures.
4. The responses of the EU and Airbus to the Appellate Body’s report signaled from the outset
that they did not take this report, or the DSB’s request for compliance, seriously. Where the
Appellate Body found that without the subsidies, Airbus would most likely not exist at all, 10 the
EU asserted that “the economic impact of these support measures in the LCA market has been
found to be very limited.”11 For its part, Airbus saw “no signi ficant consequences for Airbus or
the European support system from today’s decision.” 12 In fact, Airbus has interpreted the
rulings as an affirmation of past subsidized funding practices – a “big victory for Europe.” 13
Airbus CEO Tom Enders responded to the 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.14
5. Consistent with these statements, the EU and its member States took no affirmative steps to
withdraw the LA/MSF subsidies. This is not litigation rhetoric on the part of the United States.
The Panel made a factual finding that only two of the 36 steps the EU said it took to comply
with the DSB recommendations and rulings were related to ongoing subsidization, and that
these related exclusively to the Bremen airport subsidy and the Mühlenberger Loch subsidy.
With respect to the other subsidies , including all of the LA/MSF, “the remaining 34 alleged
compliance ‘steps’ are not ‘actions’ relating to the ongoing (or even past) subsidization of
Airbus LCA . . . .”15
6. The EU did not appeal the Panel’s finding that only two of the 36 alleged steps – and none of
the LA/MSF-related steps – were affirmative compliance actions. Thus, for purposes of this
proceeding, it is a matter of uncontested fact that the EU took no actions to withdraw the
LA/MSF subsidies or remove their adverse effects. The EU’s appeal is therefore not about
alleged failures by the compliance Panel to recognize the efficacy of its nonexistent compliance
with respect to LA/MSF subsidies, but about whether the Panel was correct in declining to
accept a series of mere assertions and arguments as a substitute for affirmative steps that
would have brought the EU’s measures into compliance.
7. To make matters even worse, the four Airbus member States actually granted another round
of LA/MSF to Airbus, this time to launch its latest new m odel, the A350 XWB, amounting to an
additional USD 4.8 billion,16 for a total of approximately USD 20 billion in LA/MSF principal.
8. After literally thousands of pages of written submissions, 292 questions to the parties, and
nearly seven years of WTO dispu te settlement, the EU did nothing to withdraw the massive

8 EC – Large Civil Aircraft (AB), para. 1418.
9 Minutes of Meeting Held in the Centre William Rappard on 1 June 2011, WT/DSB/M/297, para. 28
(11 July 2011).
10 EC – Large Civil Aircraft (Panel), para. 7.1984.
11 WTO Airbus Case – Appellate Body overturns key findings of the Panel in favour of the EU, EU Press
Release (May 18, 2011) (Exhibit USA-3).
12 WTO final ruling: Decisive victory for Europe, Airbus Press Release (May 18, 2011) (Exhibit USA-4).
13 WTO final ruling: Decisive victory for Europe, Airbus Press Release (May 18, 2011) (Exhibit USA-4).
14 WTO final ruling: Decisive victory for Europe, EADS Statement (May 18, 2011) (Exhibit USA-5)
(emphasis added). Similarly, Ranier Ohler, Airbus’s 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.” WTO final ruling: Decisive victory for Europe, Airbus Press Release (May 18, 2011)
(Exhibit USA-4).
15 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, WT/DS316/RW, circulated 22 September 2016,
para. 6.42 (“Compliance Panel Report”).
16 Airbus set to gain aid for A350, Kevin Done and Peggy Hollinger, Financial Times (June 15, 2009)
(Exhibit USA-7).

amounts of LA/MSF that were the subject of the original U.S. consultation and panel requests.
The United States considered that this course of inaction on the earlier LA/MSF and grant of
new LA/MSF only served to bring the EU farther out of compliance with Articles 5 and 6.3 of
the SCM Agreement. It accordingly commenced this proceeding under Article 21.5 of the DSU.
And thus, unsurprisingly, after further thousands of pa ges of written submissions ,
166 additional questions to the parties, and a searching evaluation, the compliance Panel came
to the conclusion that the EU had not complied with the recommendations and rulings of the
DSB. It found further that, as with past Airbus aircraft, the USD 4 billion in LA/MSF for the
A350 XWB conferred a subsidy and caused adverse effects to U.S. interests, including lost
sales of 50 airplanes worth billions of dollars. 17 Overall, the compliance Panel found 375 lost
orders worth tens of billions of dollars,18 plus displacement and/or impedance in eight different
markets, including in the EU, China, India, and Australia.19
9. That brings us to the present day. The EU has appealed the compliance Panel’s findings,
asserting that the Panel misinterpreted and misappl ied the relevant provisions of the
SCM Agreement and DSU, and that it failed to conduct an objective assessment of the matter
for purposes of Article 11 of the DSU. None of its claims has any merit.
10. Section II addresses the standard applied to evaluate wh ether a party has complied with a
recommendation that it come into compliance with its obliga tion under Article 5 of the
SCM Agreement not to cause adverse effects through the use of subsidies. The Panel noted
that Article 5 defines WTO inconsistency in t erms of the effects of subsidies, and that the
Appellate Body found that “a past subsidy that no longer exists may be found to cause or have
caused adverse effects that continue to be present during the reference period.” 20 It
accordingly found that the alleged passive expiry of certain LA/MSF subsidies did not relieve
the EU of its obligation to come into compliance with Article 5 with respect to the effects of
those subsidies. Article 7.8 of the SCM Agreement describes t he remedy for inconsistencies
with Article as a choice between withdrawing the subsidy or removing its adverse effects. The
EU argued before the Panel, and now argues on appeal, that the alleged passive expiry of
actionable subsidies achieves their “withd rawal,” and argues that it accordingly has no
obligation with respect to their current adverse effects. This argument fails to account for the
Appellate Body’s finding in the original proceeding, based on reasoning that applies to the
present time, that t he EU’s LA/MSF subsidies cause adverse effects with respect to all of
Boeing’s existing aircraft. Thus, the EU’s interpretation of Article 7.8 would allow it to continue
to act inconsistently with Article 5. This interpretation contradicts the proper int erpretation of
Article 7.8, in accordance with customary rules of interpretation applicable to the covered
agreements, and improperly downplays the massive ongoing lost sales, displacement, and
impedance that LA/MSF has been causing for at least a decade, as a “temporary” market
effect. They provide no basis to modify or reverse the Panel’s findings.
11. Section III addresses the EU’s argument that the Panel erred in finding that there is no
disagreement between the parties as to whether the EU is currently i n compliance with its
WTO obligations with respect to the Mühlenberger Loch and Bremen runway subsidies and,
therefore, no need to make a finding on that issue. The United States has been clear
throughout the proceeding that it made no claim of noncomplia nce with respect to the Bremen
runway subsidy, and since its second written submission that it is not pursuing any claim on
the Mühlenberger Loch subsidy. The EU has taken the position that any such claim would be
unfounded. There is accordingly no disag reement between the parties regarding whether the
EU’s measures have taken to comply are consistent with the SCM Agreement’s relevant
disciplines, and no need for a finding by the Panel.
12. Sections IV and V respond to the EU’s claims of error regarding the P anel’s selection of a
commercial benchmark for LA/MSF for the A350 XWB. Section IV pertains to the corporate
borrowing rate element of the benchmark in particular. The EU argues that the Panel erred by

17 Compliance Panel Report, para. 6.1781. List prices for the relevant aircraft as of 2011 are provided
at paragraph 6.1295 of the compliance Panel’s report. The total value of these lost orders runs well into the
billions of dollars under any reasonable assumption about discounts from list price.
18 Compliance Panel Report, para. 6.1781. List prices for the relevant aircraft are provided in
paragraphs 6.1239, 6.1295, and 6.1373 of the Compliance Panel Report. The total value of these lost orders
runs well into the tens of billions of dollars under any reasonable assumption about discounts from list price.
19 Compliance Panel Report, paras. 6.1817, 7.1(d)(xv).
20 Compliance Panel Report, para. 6.820, quoting EC – Large Civil Aircraft (AB), para. 712.

using the one-month and six-month average yield of a n EADS bond to establish the corporate
borrowing rate. According to the EU, the Panel was required to limit itself to the 24 -hour
period coinciding with the finalization of the terms and conditions of LA/MSF in selecting data
for the commercial benchmark. However, no provision of the covered agreements imposes
such a limitation on panels – and in fact, the Appellate Body’s guidance suggests that panels
should construct commercial benchmarks on the basis of any relevant information that is
available at the time of finalization of the terms and conditions of a subsidy, including
information that pre -dates finalization.21 This broader approach is especially suitable on the
facts of this case, because the terms and conditions of LA/MSF for the A350 XWB were
negotiated through [BCI]22 that extended over a period of approximately [BCI] or more.23
13. Section V pertains to the Panel’s selection of the project -specific risk premium (“PSRP”)
element of the commercial benchmark for LA/MSF for the A350 XWB. The EU argues that the
Panel should have undertaken a “progressive search” for a commercial benchmark loan
instrument, which supposedly would have led it to devise a PSRP based on Airbus contracts
with its risk -sharing suppliers (“RSS”) for the A350 XWB project, rather than the PSRP for
LA/MSF for the A380 from the original dispute, which is what the Panel actually did. However,
the Panel was under no requirement to perform the “progressive search” that the EU
advocates. On the contrary, the “progressive search” requi rement applies to domestic
authorities conducting countervailing duty investigations, whereas in WTO disputes under Parts
II and III of the SCM Agreement the burden is on the parties – not the Panel – to establish the
appropriate commercial benchmark. The United States met this burden by establishing the
suitability of the A380 PSRP for LA/MSF for the A350 XWB, and the EU failed to put forward
any alternative. Indeed, the EU did not even submit the RSS contracts that it now argues,
belatedly, are so essen tial to the Panel’s benchmark analysis. In any event, a “progressive
search” would likely have led the Panel to select the PSRP for the A380, just as it actually did,
because LA/MSF for the A380 has terms closer to those of LA/MSF for the A350 XWB than RS S
contracts for the A350 XWB, as far as available evidence indicates.
14. Section VI addresses the EU challenge to the Panel’s finding that adverse effects should be
assessed based on three product markets: single -aisle, twin -aisle, and very large aircraft
(“VLA”). The EU alleges that the Panel “replaced the Appellate Body’s ‘significant competitive
constraints’ standard” with a standard based on the mere existence of a competitive
relationship, regardless of the nature or degree of that relationship. 24 Both EU premises are
wrong.
15. As the Panel found, the Appellate Body did not endorse a “significant competitive constraints
standard” when it used that phrase a single time in a footnote, and “there is no textual basis
for interpreting the word ‘market’ that app ears in Article 6.3(a), (b), and (c) of the
SCM Agreement in a way that would mean that ‘serious prejudice’ could only ever be found to
exist in the context of product markets where there is vigorous (‘significant’ or ‘close’)
competition.”25
16. Moreover, the Panel did not apply a standard that treated products as competing in the same
market where any competitive relationship existed. This is obvious in the Panel’s
acknowledgment that, while the three product markets it found captures most competitive
interactions, some competition exists between aircraft in different markets. Rather, the
Panel’s 90-page analysis followed the Appellate Body’s guidance strictly and carefully assessed
extensive argumentation and voluminous evidence, including multiple expert re ports and HSBI
concerning marketing strategies and sales campaigns. Therefore, the Panel correctly
interpreted and applied Article 6.3 and made an objective assessment of the matter as
required by DSU Article 11. Accordingly, the EU’s allegations of erro r are meritless, as
demonstrated further in Section VI.

21 EC – Large Civil Aircraft (AB), para. 836.
22 Compliance Panel Report, para. 6.644 (quoting Tom Williams, Executive Vice President, Programmes,
Airbus SAS, May 17, 2013 (Exhibit EU-354(BCI)), para. 3).
23 See Compliance Panel Report, paras. 6.55 and 6.645.
24 EU Appellant Submission, paras. 602, 624.
25 Compliance Panel Report, para. 6.1211.

17. Section VII addresses the EU argument that the finding in US – Large Civil Aircraft that
Boeing large civil aircraft were subsidized creates a “new” factual matter. On that basis, the
EU contends that “cogent reasons,” centered on what the EU purports is intervening Appellate
Body guidance, require a review of the original panel’s find ing that Article 6.4 of the
SCM Agreement does not preclude a finding of displacement under Article 6.3(b) when the
exports of the complaining Member have themselves been subsidized. The extent to which
Boeing aircraft were subsidized played no role in the original panel’s legal analysis and finding.
The original panel’s finding was not appealed, so the Appellate Body d id not address this issue
of law during the original proceeding. The DSB adopted the original panel report as modified
by the Appellate Body. The EU is not entitled in this compliance proceeding to have the
Appellate Body consider, pursuant to DSU Articl e 17.13, whether the legal finding of the
original panel and recommendations and rulings of the DSB in re spect of Article 6.4 of the
SCM Agreement should be upheld, modified, or reversed. Therefore, the Panel did not err
when it found that the EU argument fails to justify modifying or reversing the original panel’s
finding that Article 6.4 does not describe the exclusive basis on which a claim of displacement
or impedance under Article 6.3(b) may be demonstrated.
18. Section VIII addresses the EU’s challenge t o the Panel’s analysis of causation. According to
the EU, the Panel’s incorrect approach to causation left it blind to the effects of the the
passage of time and Airbus’s post -launch investments in the A320 and A330 programs, which
the EU believes severed any causal link between LA/MSF and the presence in the market of the
A320, A330, and A380. These allegations are demonstrably untrue. The Panel explicitly
adhered to the counterfactual approach preferred by the Appellate Body. Using the original
findings as its starting point, the Panel exhaustively examined the evidence and argumentation
concerning the counterfactual situation in the post -implementation period. In doing so, it
carefully evaluated the EU’s arguments about the passage of time and interv ening causes. It
found them wanting because they were factually and legally unsupported, not because of an
incorrect analytical approach.
19. The Panel followed the Appellate Body’s guidance that the effects of LA/MSF subsidies will at
some point come to an end, while recognizing that the determination of when that happens
will depend on the evidence, and not expectations as to the “life” of the subsidy. Accordingly,
the Panel found that the indirect effects of the earliest rounds of LA/MSF did not have a
genuine connection to the launch and market presence of the A350 XWB. This disproves the
EU’s contention that the Panel’s analytical approach was incapable of accounting for the way
that subsidy effects dissipate over time. Although the EU repeatedly asserted that the passage
of time had deprived past LA/MSF subsidies of any current effect, these were mere assertions,
without any evidentiary or logical basis.
20. A similar flaw undermined the EU’s critique of the Panel’s analysis of Airbus’s post -launch
investments. The Panel recognized their significance but found that they did not render
insubstantial the effects of LA/MSF subsidies, particularly given that the post -launch
investments were dependent on those subsidy effects for their existence.
21. Overall, the EU did not provide the Panel with any basis to find that, absent LA/MSF subsidies,
Airbus would have taken the sales and market share that it did during the post-implementation
period.26 The EU also contends that the Panel lacked a basis for finding an y effects caused by
LA/MSF to the A380 and A350 XWB, but these arguments are based on mischaracterizations of
the findings in the original proceeding and this proceeding. In sum, the Panel found that
LA/MSF and other subsidies continue to cause serious pr ejudice because that is what the
evidence showed when considered in light of the findings in the original proceeding. Airbus’s
sponsor governments have provided massive subsidies designed to create production
programs lasting for decades and enable the fi nancial, technological, and industrial bases for
subsequent production programs that are also directly subsidized at a tremendous scale. This
pattern continued during the pendency of the original proceedings and this compliance
proceeding with the provision of still more LA/MSF subsidies to the A350 XWB.27 The Panel did
not err in recognizing this longstanding pattern of subsidization and its adverse effects on U.S.
interests.

26 See Compliance Panel Report, para. 6.1526 (“the European Union does not argue in this proceeding
that a non-subsidized Airbus would have come into being some time after the end of 2006.”).

22. Section IX addresses the EU’s critique of the Panel’s displacement and/or impedance findings,
which reflect an incorrect interpretation of the SCM Agreement and are at odds with the facts
found by the Panel. The Panel correctly examined the U.S. claims of displacement and
impedance through a unitary counterfactual analys is.28 Considered together with its findings
regarding the absence of Airbus LCA from the market in the plausible counterfactual scenarios,
the Panel’s assessment of the data demonstrated that the challenged LA/MSF and other
subsidies prevented the U.S. LCA industry from realizing improved market positions, either by
substituting subsidized Airbus LCA for exports of U.S. LCA (displacement) or by obstructing
U.S. LCA export volumes and market share from being higher or materializing at all
(impedance). Therefore, the EU has identified no valid reason to reverse or modify the Panel’s
findings.
23. Section X addresses the EU argument that, if the Appellate Body reverses or modifies certain
findings by the Panel, there is no basis to complete the Panel’s analysis. As Sections II
through IX show, the EU has provided no basis to do this. Nonetheless, assuming arguendo
that the Appellate Body were to reverse one or more of the Panel’s findings, the EU errs in
arguing that there are insufficient findings of fact and u ncontested facts for the Appellate Body
to complete the adverse effects analysis. The most glaring error is the contention that partial
reversal of the Panel’s findings regarding the EU’s failure to withdraw LA/MSF subsidies would
“re-constitute the basket of subsidies that are subject to the Appellate Body’s adverse effects
assessment,”29 and transform the effects of any withdrawn subsidies into non-attribution
factors that preclude findings of adverse effects with respect to unwithdrawn subsidies. 30 In
effect, this argument asks the Appellate Body to find that the effects of WTO -inconsistent
subsidies have themselves brought the EU fully into compliance.

28 EC – Large Civil Aircraft (AB), para. 1163.
29 EU Appellant Submission, para. 1074.
30 EU Appellant Submission, para. 1097.

ANNEX B-4
EXECUTIVE SUMMARY OF THE EUROPEAN UNION'S APPELLEE'S SUBMISSION
1 INTRODUCTION
1. In its Other Appellant’s Submission, the United States raise s what it characterises as
“two limited issues” with the Report of the Panel in European Communities and certain Member
States – Measures Affecting Trade in Large Civil Aircraft (Reco urse to Article 21.5 of the DSU
by the United States) (“compliance Panel” or “Panel”).1 The European Union requests that the
Appellate Body reject the United States’ appeal regarding both issues.
2 THE APPELLATE BODY S HOULD REJECT THE US APPEAL THAT THE P ANEL
ERRONEOUSLY FOUND TH AT THE LIVES OF PRE -A380 LA/MSF SUBSIDIE S HAVE
EXPIRED
2. The United States appeals certain elements of the Panel’s fin dings that the lives of the
pre-A380 LA/MSF subsidies expired before or shortly after the end of the implementation
period on 1 December 2011.2 The US appeal is contingent on the Appellate Body reversing the
Panel’s interpretation of Article 7.8 of the SCM Agreement.3
3. According to the United States, the Panel erred in the interpreta tion and application of
Article 1.1(b) of the SCM Agreement with respect to some (but not all) of the pre -A380
LA/MSF subsidies for which it had found had that their ex ante expected lives had expired. 4
Although its position is not entirely clear, for the United States, this error seems to arise
because actual repayment of principal and interest had not been effected, and/or the actual
marketing life of the corresponding aircraft had not expired, by the end of the implementation
period.
4. The Appellate Body should dismiss the US appeal. Despite p aying lip -service to the
firmly-established principle that the life of a subsidy must be determined on an ex ante basis
at the time of the grant of a subsidy, the United States’ appeal is in fact premised on the
firmly-rejected principle that the life of a subsidy depends on how the subsidy actually
performs following grant. At its most basic level, the Panel correctly interpreted and applied
Article 1.1(b) when finding that the lives of all of the pre -A380 LA/MSF subsidies at issue in
this appeal have expired, based on ex ante considerations regarding the expected life of each
subsidy.
5. First, the Panel correctly interpreted Article 1.1(b). Based on the text of Article 1.1(b) and in
light of its context (Article 14 of the SCM Agreement ), the App ellate Body in the original

1 US Other Appellant’s Submission, para. 1.
2 The United States does not appeal the Panel’s findings that the seven capital contribution subsidies
had expired before the end of the implementation period, or that two regional development grants had expired
in 2014. Nor does the United States appeal the Panel’s findings that the life of the A300- and A310-related
LA/MSF subsidies have come to an end.
3 US Other Appellant’s Submission, Section II.
4 US Other Appellant’s Submission, paras. 17-18.

proceedings found that the “benefit” analysis involves an “ ex ante analysis that does not
depend on how the particular financial contribution actually performed after it was granted”.5
6. Consistent with the Appellate Body’s guidance, the compliance Panel found that it was required
to determine the life of each LA/MSF subsidies on the basis of an ex ante assessment.6 The
United States does not advance any argument suggesting why this interpretation of Article
1.1(b) is erroneous. To the contrary, the United Sates seems to agree with the Panel – and
with the European Union – that Article 1.1(b), properly interpreted, requires determination of
the life of a subsidy on the basis of an “ ex ante assessment”.7 Both Participants thus appear
to agree that the Panel properly interpreted Article 1.1(b). 8 There is, therefore, no
interpretative appeal.
7. Second, the United States’ argument that the Panel erred in the application of Article 1.1(b)
should also be dismissed. Despite its agre ement that Article 1.1(b) calls for an ex ante
assessment, the United States erroneously applies an ex post assessment, focusing on how
the particular subsidy actually performed after it was granted.
8. The United States submits that the ex ante expectations of the grantor and recipient must be
determined ex post, in light of either (i) the actual loan life; and/or (ii) the actual marketing
life for the aircraft programme. Specifically, in its view, the Panel failed to recognise that “the
grantor and recipi ent would expect the benefit to continue as long as payments were due ”,9
which the United States asserts is a “variable event” that depends on actual repayment and
that is not susceptible to determination ex ante .10 In other instances, the United States
asserts that “the parties expected the benefit of LA/MSF to last throughout the life of the
subsidized aircraft programs”.11
9. The US argument that the life of a LA/MSF subsidy must be determined in light of how the life
of the subsidy or the marketing life o f the funded aircraft plays out ex post, is contradicted by
the United States’ acknowledgement that ex ante expectations must form the basis for the
determination of the life of a subsidy.
10. Contrary to the Appellate Body’s guidance, each of the two approa ches counselled by the
United States by definition “depend on how the particular subsidy actually performed after it
was granted”.12 Absent the proverbial crystal ball, the actual marketing life and actual loan life
are not time periods that can be determi ned ex ante . They are time periods that, by
definition, can be determined only ex post , once the actual marketing life of the LCA
programme has come to an end, or actual final repayment have occurred, often decades after
the grant of the subsidy.

5 Appellate Body Report, EC – Large Civil Aircraft, para. 706 (emphasis in original). Appellate Body
Report, EC – Large Civil Aircraft, para. 1241 (emphasis added). See also, Id., paras. 707 (“a benefit analysis
under Article 1.1(b) is forward looking and focuses on future projections”; “ex ante analysis of benefit”;
“the period of time over which the subsidy is expected to be used for future production) (emphasis in original,
underlining added), 709 (“{a}t 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”; a panel “must consider the trajectory of the subsidy
as it was projected to materialize over a certain period at the time of grant”; “a panel must take into account
that a subsidy provided accrues and diminishes over time, and will have a finite life”; “‘intervening events’ that
... may affect the projected value of the subsidy as determined under the ex ante analysis”) (emphasis in
original, underlining added), 710 (“the depreciation of the subsidy that was projected ex ante”), 1236 (“a panel
must take into account in its ex ante analysis how a subsidy is expected to materialize over time”; “{a} panel
is also required to consider whether the life of a subsidy has ended, for example, by reason of the amortization
of the subsidy over the relevant period or because the subsidy was removed from the recipient”) (emphasis in
original).
6 Panel Report, paras. 6.876-6.879, 6.890.
7 US Other Appellant’s Submission, paras. 9 , 10.
8 US Other Appellant’s Submission, para. 9.
9 US Other Appellant’s Submission, para. 12 (emphasis added).
10 US Other Appellant’s Submission, paras. 10, 14.
11 US Other Appellant’s Submission, para. 15. See also, Id., paras. 8 (footnote 15) (“continue to be
marketed”), 18 (“LA/MSF for the A320, A330-200, and A330/A340 Basic had not expired as of
December 1, 2011, given that the corresponding large civil aircraft production programs were still active at
that time (and still are)”), 17 (footnote 35) (“continue to be marketed”).
12 Appellate Body Report, EC – Large Civil Aircraft, para. 706 (emphasis added). See also, Id.,
para. 1241.

11. The Eu ropean Union notes that, in one instance, namely as regards LA/MSF for the
A340-500/600, the United States takes a different approach. Because, in its view, this
programme “failed prior to full repayment”, the United States submits that the life of the
subsidies does not end with the actual marketing life of the A340 -500/600 programme, but
extends well into the future, namely until the life of any so -called “debt forgiveness” comes to
an end.13 For at least two separate reasons, the US argument must be rej ected. First, and
yet again, the US argument effectively rejects an ex ante assessment of the life of a subsidy,
in favour of an approach based on an ex post assessment of the performance of a subsidy
subsequent to grant. Second, the United States mischa racterises the nature of the LA/MSF
subsidy as involving a second subsidy, in the form of “debt foregiveness”, in situations where
contingently repayable loans remain un -repaid because the contingency ( i.e., delivery of an
aircraft) for repayment is not tr iggered. The US approach results in “double -counting” of the
benefit conferred on the recipient.14
12. Further, and also regarding LA/MSF for the A340 -500/600, the United States argues that the
Panel’s findings were in any event “irrelevant” to assess EU com pliance, because these
subsidies expired after the end of the implementation period, albeit well before the Panel made
its findings and issued its report.15 The United States errs.
13. It is well established that a panel, including a compli ance panel, must ass ess the
WTO-consistency of a measure before it based on the entirety of the evidence. 16 In the
present case, in light of the ex ante nature of the analysis, all the evidence on the expiry of
any pre -A380 LA/MSF subsidy even predates, by more than a decade , the Panel’s
establishment. There is, therefore, no obstacle to the assessment of that evidence. In any
event, even where evidence post-dates the panel’s establishment, such developments must be
taken into account to assess compliance, because not doing so would frustrate the objective of
the DSU to provide for the prompt settlement of disputes.
14. Finally, the European Union notes that the United States does not ask the Appellate Body to
reverse the Panel’s findings that the lives of LA/MSF subsidies for aircraft programmes that
were no longer marketed on 1 December 2011, namely the A300 and A310 models, have
expired.17 This means that, even were the Appellate Body to agree with the United States’
conditional appeal, it would still be compelled to reverse most of the Panel’s adverse
effects-related findings.
15. Indeed, having reversed the Panel’s erroneous interpretation of Article 7.8 of the
SCM Agreement (which is the condition imposed by the United States for the Appellate Body to
consider this aspect of its other appeal), the Appellate Body would have to find that these
adverse effects-related findings are erroneous, since the adverse effects found by t he Panel
are fuelled by subsidies that the United States, itself, accepts have expired, and are therefore
withdrawn, within the meaning of Article 7.8.
3 THE APPELLATE BODY S HOULD REJECT THE UNI TED STATES’ ASSERTIO NS RELATING
TO THE PANEL’S FINDINGS UNDER ARTICLE 3.1(B) OF THE SCM AGREEMENT
16. The United States also makes a number of assertions regarding the compliance Panel’s
findings that the United States failed to demonstrate that French, German, Spanish and UK

13 US Other Appellant’s Submission, para. 17 (footnote 35). See also, Id., paras. 10 (footnote 17), 12.
14 First, at the time the loan is concluded, because the expected return on the loan falls below what a
commercial lender would have demanded to assume the risk that deliveries would fall short of the number
required to effect full repayment of principal and interest; and, second, where the number of aircraft deliveries
actually made falls short of projections made by the parties at the time the loan agreements were concluded
(in which case, the United States considers that an additional subsidy to the recipient in the form of the
“forgiveness” of debt is conferred).
15 US Other Appellant’s Submission, footnotes 14 and 35.
16 See, e.g., Panel Report, para. 6.1443; Panel Report, US – Upland Cotton (Article 21.5 – Brazil),
para. 10.18, 10.105 and 10.248; Panel Report, EC– Large Civil Aircraft, paras. 7.1694 and 7.1714;
Appellate Body Report, US – Zeroing (Japan) (Article 21.5 – Japan), paras. 121-130.
17 US Other Appellant’s Submission, paras. 17-18.

LA/MSF for the A350XWB constitute prohibited s ubsidies under Article 3.1(b) of the
SCM Agreement.18
17. The United States does not, however, allege error with respect to those findings. 19 Instead,
the United States limits its submissions by reference to what it calls a “competing
interpretation” of Artic le 3.1(b) that it alleges was under consideration by the panel in
US ‒ Conditional Tax Incentives for Large Civil Aircraft (“DS487”). In particular, the United
States requests the Appellate Body to determine the correctness of that alleged “competing
interpretation” of Article 3.1(b).20 Conditional on the Appellate Body agreeing with this alleged
“competing interpretation”, the United States requests the Appellate Body to reverse the
findings of the Panel in the present dispute and to complete the legal analysis.21
18. As a threshold matter, the European Union finds it necessary to clarify that the entirety of the
United States’ “appeal” is premised on an erroneous assumption built into its choice of
vocabulary. The United States alleges that “competing inter pretations” of Article 3.1(b) are at
issue in the present dispute and in DS487. In making that allegation, the United States
assumes that different outcomes in two different disputes, under the same treaty provision,
necessarily indicate the existence of “competing interpretations” of the provision. This
assumption is erroneous – different outcomes may well be the result of differences in the
application of the same interpretation to two different fact patterns at issue in the two
disputes.
19. This is prec isely what has happened in the present dispute and in DS487. The interpretation
of Article 3.1(b) advanced by the European Union in both cases and accepted by both Panels is
the same: a subsidy contingent upon the production of a particular good does not , without
more, breach Article 3.1(b), irrespective of whether or not that good later becomes an input,
as a matter of fact; but a subsidy contingent upon the production of an LCA and, in addition, a
requirement that a particular input (the wing) be manufa ctured domestically, does breach the
provision. The difference in outcome between the two cases is driven not by different
interpretations, but rather by different fact patterns (and associated arguments).
20. On three separate grounds, the Appellate Body s hould reject the US “appeal”. First, for
several reasons, the assertions upon which the United States seeks the Appellate Body’s
review of the Panel’s findings do not properly constitute an “appeal” within the meaning of the
DSU. To begin, at its most ba sic level, the Appellate Body should reject the US “appeal” as
invalid, because the United States has failed to allege any error relating to “issues of law
covered in the panel report” or “legal interpretations developed by the panel”, within the
meaning of Article 17.6 of the DSU. In fact, the United States agrees with the interpretation
adopted by the Panel. 22 Without an allegation of error, there is no “appeal” for the Appellate
Body to adjudicate.
21. Moreover, considerations relating to DS487 cannot serve as a basis for appellate review, in
these proceedings, of interpretative findings allegedly under consideration by a different panel
in a different dispute, and cannot serve as a surrogate for a valid allegation of error by the
Panel in this dispute. Dec iding otherwise would prejudice the procedural rights of (i) the
European Union (by forcing the European Union to comment on the correctness of an
interpretative position allegedly relevant to DS487, without the assistance of the record in that
case); and (ii) third parties in DS487 that are not third participants in the present appeal.
22. Further, the United States’ professed “interest in ensuring that the same legal approach is
applied” in two disputes cannot serve as the basis for the Appellate Body to un dertake
appellate review in these proceedings of interpretative issues allegedly arising in DS487.
Rather than pursuing a pre -emptive appeal, the appropriate course of action for the
United States would be to advocate, in its appeal of the panel report in DS487, the interpretive

18 US Other Appellant’s Submission, Section III.
19 US Other Appellant’s Submission, para. 22.
20 US Other Appellant’s Submission, paras. 21-23.
21 US Other Appellant’s Submission, para. 23, Section III.B.
22 US Notice of Other Appeal, para. 1; US Other Appellant’s Submission, para. 22.

approach to Article 3.1(b) adopted by the Panel in the present dispute, with which the United
States explicitly “agrees”.23
23. Second, Rule 21(2)(b)(i) of the Working Procedures for Appellate Review requires that an
appellant’s submission set out “a precise statement of the grounds for the appeal, including
the specific allegations of errors in the issues of law covered in the panel report and legal
interpretations developed by the panel, and the legal arguments in support thereo f”.24 The
United States’ “appeal” fails to meet this requirement.
24. Third, and finally, the US “appeal” must be rejected because it is based on a case that is
entirely different from the case advanced by the United State s before the Panel. The
United States seeks to litigate before the Appellate Body a fundamentally different case from
the one it litigated before the Panel. Appellate proceedings are not the appropriate venue for a
party to make fundamental changes to the case it has brought, especially wher e, as here,
doing so requires reliance on factual assertions that are not the subject of panel findings , and
that do not constitute undisputed facts of record.
25. In these appellate proceedings, the United States has abandoned its argument, made to the
Panel, that the requirement to produce components domestically, coupled with the fact that
these components are used in downstream assembly of the aircraft, demonstrates that the
LA/MSF lenders “ effectively require” the subsidy recipient to use domestic over i mported
goods. Instead, the United States now seeks to identify an express de jure requirement to
“use” domestic over imported goods in certain provisions of the A350XWB LA/MSF contracts.
In advancing this new case, the United States refers on appeal to specific clauses in each of
the A350XWB LA/MSF contracts, and asserts that those clauses have a particular meaning.
Yet, the meaning of these provisions in municipal law was never raised before the Panel or
debated between the Parties, much less the subje ct of findings of fact by the Panel or
agreement between the Parties.
26. In these circumstances, the US “appeal” cannot be sustained. In light of its authority under
Article 17.6 of the DSU, the Appellate Body is “manifestly preclude{d}” from following the
course requested by the United States, because doing so would require it “to solicit, receive
and review new facts that were not before the Panel, and were not considered by it”.25
27. Finally, even were the Appellate Body to consider it appropriate to address the United States’
“appeal”, it should nonetheless reject the United States’ assertions on the merits.
28. First, the Panel did not err in its interpretation of Article 3.1(b) of the SCM Agreement . The
ordinary meaning of the terms used in Article 3.1(b), i n their context and in the light of the
object and purpose of the treaty, clarify that a subsidy contingent solely on domestic
production of goods is not prohibited. Accordingly, the Panel did not err in finding that “the act
of granting subsidies to firms so long as they engage in domestic production activities, without
more, should not be equated to making those subsidies contingent on the use of domestic over
imported goods and hence prohibited”.26
29. Second, even were the Appellate Body to find that the Pa nel erred in its interpretation of
Article 3.1(b), quod non , it would be unable to complete the legal analysis on the terms
requested by the United States. In previous disputes, the Appellate Body has proceeded to
complete the legal analysis only where fa ctual findings by the panel or undisputed facts of
record have allowed it to do so. 27 The US request for completion is, however, built on factual
assertions concerning the meaning of provisions in the A350XWB LA/MSF agreements that are
neither supported by factual findings by the Panel or undisputed facts of record. These factual

23 US Notice of Other Appeal, para. 1; US Other Appellant’s Submission, para. 22.
24 Rule 23(3) makes this requirement applicable to an other appellant’s submission.
25 Paraphrasing Appellate Body Report, Canada – Aircraft, para. 211; Appellate Body Report,
EC – Export Subsidies on Sugar, paras. 240-242.
27 See, e.g., Appellate Body Report, Australia – Salmon, paras. 117-118; Appellate Body Report,
US – Section 211, para. 352; Appellate Body Report, US – Anti-Dumping and Countervailing Duties (China),
para. 528; Appellate Body Report, US – Large Civil Aircraft, para. 649; Appellate Body Report,
Colombia – Textiles, para. 5.30.

assertions were never made by the United States before the Panel , and are, instead, newly
made in this appeal . The European Union never had an opportunity to dispute the factual
assertions now raised by the United States; the European Union cannot be said to have left
undisputed factual assertions that were not put to it by the United States. Accordingly, there
are no findings of fact or undisputed facts of record that would allo w the Appellate Body to
complete the legal analysis in the manner requested by the United States.

ANNEX C
ARGUMENTS OF THE THIRD PARTICIPANTS
Contents Page
Annex C-1 Executive summary of Brazil's third participant's submission 44
Annex C-2 Executive summary of Canada's third participant's submission 45
Annex C-3 Executive summary of China's third participant's submission 48
Annex C-4 Executive summary of Japan's third participant's submission 50

ANNEX C-1
EXECUTIVE SUMMARY OF BRAZIL'S THIRD PARTICIPANT'S SUBMISSION
1. In relation to Article 7.8 of the SCM Agreement, Brazil agrees with the Panel’s rejection of the
European Union’s argument that the end of the life of a subsidy ipso facto extinguishes a
Member’s compliance obligation under Article 7.8 of the SCM Agreement with respect to such
subsidies.
2. Brazil recalls that the original panel’s findings under Articles 6.3(b) and 6.4 were not appealed.
Accordingly, the Appellate Body should not revisit this interpretation in the compliance
proceeding.
3. Brazil also considers that the Panel conducted a correct analysis in interpreting "market" under
Article 6.3 of the SCM Agreement. There is no support in WTO jurisprudence for the EU's
attempt to characterize "market" as requiring a complaining Member to undertake a
quantitative assessment of the degree of competition to determine if it is "significant".
4. Finally, the Panel properly interpreted Article 3.1(b) of the SCM Agreement when it found that
subsidies conditioned on the domestic production of inputs to be used in the manu facture of a
subsidized product are not prohibited. For Brazil, this provision does not prevent a Member
from conditioning the provision of a subsidy on the performance of production steps in the
country granting the subsidy.

ANNEX C-2
EXECUTIVE SUMMARY OF CANADA'S THIRD PARTICIPANT'S SUBMISSION
I. EXECUTIVE SUMMARY1
1. Canada submits that the Appellate Body should uphold the Panel’s interpretation of the
disciplines on prohibited import -substitution subsidies under Article 3.1(b) of the
SCM Agreement but reverse the Panel’s interpretation of the compliance obligation under
Article 7.8.
II. THE PANEL CORRECTLY INTERPRETED ARTICLE 3.1(B) OF THE SCM AGREEMENT
2. The Appellate Body should uphold the Panel's interpretation that Article 3.1(b) of the
SCM Agreement does not prohibit subsidies merely because they require the recipient to
engage in the domestic production of aircraft-related goods.
3. Article 3.1(b) does not discipline domestic production subsidies, regardless of whether the
activities mandat ed by those subsidies result in the production of input or finished goods.
GATT Article III:8(b), the Appellate Body's findings in Canada – Autos and the panel's findings
in US – Tax Incentives support this view.
4. Furthermore, Article 3.1(b) does not discip line domestic production subsidies even if the
activities mandated by those subsidies result in the production of specialized input goods that,
because of their specialized nature, are likely to only be used in the production of finished
goods by the subsi dy recipient. In EC and certain member States – Large Civil Aircraft , the
Appellate Body found that a subsidy would not be de facto export contingent unless it provided
the recipient with an incentive to export in a way that did not simply reflect the con ditions of
supply and demand in the market. Likewise, a subsidy is not a prohibited import -substitution
subsidy unless it is geared to change the behaviour of a producer when choosing between
domestic and imported inputs in a way that does not reflect market conditions.
III. THE PANEL ERRED IN ITS INTERPR ETATION OF ARTICLE 7.8 OF THE
SCM AGREEMENT
A. The Correct Interpretation of Article 7.8 of the SCM Agreement
5. Article 7.8 of the SCM Agreement sets out how a Member is to comply with its obligations
when it is fo und to have provided a subsidy that caused adverse effects to the interests of
another Member.
6. With respect to the ordinary meaning of the terms of Article 7.8, the phrase "granting or
maintaining" indicates that the existence of a subsidy during the imple mentation period is a
precondition for the compliance obligation under Article 7.8. As expired or withdrawn subsidies
no longer exist, those subsidies entail no compliance obligation under Article 7.8.
7. Moreover, the phrase "shall take appropriate steps to remove the adverse effects or shall
withdraw the subsidy" indicates that the compliance options are disjunctive in nature.
Therefore, compliance under Article 7.8 can be achieved by withdrawing the WTO -inconsistent
subsidy.
8. The following elements of the context of Article 7.8 support this understanding.
9. First, the text of Article 7.9 of the SCM Agreement confirms the compliance options under
Article 7.8 are disjunctive.

1 Canada's Third-Participant Submission consists of 13,558 words. This Executive Summary consists of
1,347 words.

10. Second, the difference in wording between Article 5 and Article 7.8 underscores an asymmetry
between the circumstances in which a finding of an actionable subsidy may be made and the
resulting compliance obligation. This difference must be afforded meaning. Where causing
adverse effects is a constituent element for an actionable subsidy, removing those adverse
effects is not the only way to comply with Article 7.8. Members can also comply by
withdrawing the subsidy.
11. Third, the compliance obligation for prohibited subsidies and the restrictions on the application
of countervailing duties c onfirm that withdrawal of the subsidy constitutes compliance under
Article 7.8. The Appellate Body has indicated that a Member can comply with Article 4.7 of the
SCM Agreement by removing a prohibited subsidy. Moreover, if removing the subsidy negates
the right to apply countervailing duties, it must also negate the right to apply countermeasures
– the remedy for actionable subsidies.
12. Fourth, the general rule of compliance under the DSU is the removal of the WTO -inconsistent
measure. Where no subsidy exist s, as a result of expiry or withdrawal, no compliance
obligation remains.
13. With respect to the object and purpose of the SCM Agreement, it is subsidies that the
SCM Agreement disciplines, not the adverse effects that linger after the subsidies no longer
exist. Limiting the application of the compliance obligation under Article 7.8 to existing
subsidies is consistent with this object and purpose. It is also consistent with the general
objective of the WTO agreements to foster security and predictability in t he international
trading system.
B. Errors in the Panel’s Interpretation of Article 7.8
14. The Panel's interpretation of Article 7.8 under which Members are required to remove the
adverse effects of subsidies that have ceased to exist is deeply flawed.
15. With res pect to the text of Article 7.8, the Panel essentially ignored the “granting or
maintaining” requirement in Article 7.8. Where a subsidy has expired or been withdrawn, a
Member can no longer be said to be “granting or maintaining” the subsidy. Under these
circumstances, the Member is no longer subject to the compliance obligation under Article 7.8.
16. The Panel also deprived the phrase "withdraw the subsidy" of its independent meaning. If
Article 7.8 was intended under all circumstances to require the removal of the adverse effects
caused by the subsidy there would be no reason to refer to the possibility of withdrawing the
subsidy.
17. With respect to the context of Article 7.8, the Panel improperly relied on Artic le 5 of the
SCM Agreement and various provisions o f the DSU to conclude that "withdraw[ing] the
subsidy" under Article 7.8 also requires removing adverse effects. The Panel fails to recognize
that conformity with the compliance obligation under the DSU mea ns removal of the
WTO-inconsistent measure, and th at conformity with the compliance obligation for an
actionable subsidy means carrying out one of the two options contemplated under Article 7.8
of the SCM Agreement.
18. The Panel also ignored that withdrawing a subsidy is a complete compliance remedy under th e
SCM Agreement. Imposing more exacting remedial disciplines on actionable subsidies as
compared to prohibited subsidies would be incongruent with t he overall structure of the
SCM Agreement.
19. Last, with respect to the object and purpose of the SCM Agreemen t, the Panel failed to take
into account that the withdrawal of a subsidy constitutes compliance. Moreover, the Panel’s
interpretation creates significant uncertainty as to the responsibility of Members for subsidies
that no longer exist.

C. The Correct Approach to a Serious Prejudice Analysis in Compliance Proceedings
20. The Panel improperly took into account the effects of expired subsidies when it determined
that subsidies were causing serious prejudice and that the European Union had therefore failed
to remove the adverse effects of the subsidies.
21. The determination of whether a Member that has not withdrawn certain subsidies has
nevertheless complied with Article 7.8 through the removal of the adverse effects of these
subsidies should be based on a counterfactual analysis.
22. A counterfactual analysis involves a comparison between the current market situation and a
counterfactual situation without subsidies. The Panel's analysis relied on a counterfactual
situation where the challenged LA/MSF would not have been granted.
23. This is the wrong counterfactual situation. The correct counterfactual situation is rather one
where only the subsidies present at the end of the RPT do not exist. Indeed, there must be
consistency between the two options available to a respondin g Member under Article 7.8. A
Member must either withdraw the subsidies or remove their adverse effects by the end of the
RPT. If a given subsidy has been withdrawn or has expired, a Member cannot be asked to also
remove its adverse effects.
24. It is only through a comparison of the correct counterfactual situation with the current market
situation that the Panel could have properly assessed whether the subsidies that remained at
the end of the RPT caused serious prejudice and, relatedly, whether the European Union had
removed the adverse effects of these subsidies. The Panel failed to do so.

ANNEX C-3
EXECUTIVE SUMMARY OF CHINA'S THIRD PARTICIPANT'S SUBMISSION
1. China’s Third Party Submission discusses the following three issues on appeal that China
considers to be of systemic importance.
2. First, China submits that under the correct interpretation of Article 7.8 of the SCM Agreement
in accordance with customary ru les of interpretation of public international law , subsidies that
cease to exist prior to the beginning of the implementation period are outside the scope of an
implementing Member’s obligation under Article 7.8.
3. In China’s view, the explicit treaty langua ge in Article 7.8 denotes that, if a subsidy is no
longer in existence, there is nothing to be withdrawn and that the Member concerned has
fulfilled its obligation under Article 7.8. Nothing in Article 7.8 suggests that the implementing
action to withdraw the subsidy must remove any “lingering effects” of past subsidies that are
no longer in existence. The Panel’s interpretation would deprive the independent meaning of
the option under Article 7.8 to “withdraw the subsidy” and render the phrase redundant.
4. China’s interpretation finds contextual support in Article 4.7 of the SCM Agreement , which
requires the Member providing prohibited subsidies to “withdraw the subsidy without delay ”.
To interpret the same compliance option in Article 7.8 in a more onerou s way for the less
harmful form of subsidization would be against logic. China also considers that Part V of the
SCM Agreement provides relevant context for interpreting Article 7.8. In particular,
Article 19.4 provides that countervailing duties may not be imposed when a subsidy is no
longer bestowed on the subject merchandise, regardless of any lingering effects. The limits of
remedies available under Part V should also inform the correct interpretation of Article 7.8 in
Part III of the SCM Agreement.
5. In addition, by first reviewing various provisions of the DSU instead of Article 7.8 of the
SCMAgreement, the Panel has allowed the general provisions of the DSU to subsume the
“special or additional rules ” of Article 7.8. In China’s view, the important textual difference
between Article 4.7 and Article 7.8 also suggests that Article 7.8 does not necessarily require
the removal of any adverse effects, and can be read in a way that maintains its independent
meaning while at the same time being in harmony with the DSU.
6. Finally, neither in the WTO case s cited by the Panel n or anywhere under the covered
agreements does China see the basis to single out actionable subsidies as the only type of
measures subject to an implementing obligation requiring the removal of trade effects caused
by such measures after they are withdrawn, an obligation more onerous than those generally
applicable vis-à-vis all measures under Articles 3.7 and 22.8 of the DSU.
7. Second, China su bmits that under the correct interpretation and application of Articles 5(c)
and 6.3 of the SCM Agreement , the Panel ’s “but for ” approach is not a proper analysis to
determine whether the LA/MSF subsidies continue to cause serious prejudice under the present
circumstances at issue.
8. For the assessment of causation, although an inquiry seeking to identify what would have
occurred “but for” the subsidies is one possible approach suggested by the Appellate Body, the
Panel did not examine or consider whether the factual scenario before it is one of the
circumstances where the “but for ” analysis will show that the subsidy is both a necessary
cause of the market phenomenon and a substantial cause. Without such an e xamination or
consideration, the Panel improperly equated the “but for ” analysis with the proper legal
standard for finding causation under Articles 5(c) and 6.3 of the SCM Agreement , which
requires for a “genuine and substantial” cause.
9. The Panel’s approach effectively leads to a long-lasting causal chain between subsidies and
adverse effects in the LCA markets that is inconsistent with the Appellate Body ’s observation
that the effects of any subsidy can be expected to diminish and eventually come to an end

with the passage of time. Furthermore, the Panel seems to have inappropriately allocated the
burden of proof between the Parties in its application of Articles 5(c) and 6.3 of the
SCM Agreement by requiring the European Union to prove that no “genuine and substantial”
cause existed in the post-implementation period.
10. Third, while China is sceptical if any general rule or threshold could be pre -defined for the
purpose of determining the scope of product markets , China agrees with the European Union
to the extent that panels should not find two products in the same product market solely on
the basis that they exercise any competitive constraints on one another . Instead, a panel
must examine the nature and degree of competition so as to determine the scope of the
relevant product market on a case -by-case basis. Furthermore, the “nature and degree ” of
competition found to exist in a given product market should inform the assessment of serious
prejudice claims.

ANNEX C-4
EXECUTIVE SUMMARY OF JAPAN'S THIRD PARTICIPANT'S SUBMISSION
1. Japan wishes to comment on how the effects of such subsidies including R&D subsidies as the
Appellate Body in the original proceeding referred to as subsidies that (i) had the "product
effect" on subject products or (ii) "complemented and supplemented" the "product effect"
must be assessed.
2. The European Union appealed by arguing that the removal of a subsidy through removal of the
"financial contribution" will comply with Article 7.8.
3. However, Japan believes that w hen "benefits" are removed, the subsidy is thereby withdrawn
and consequently the adverse effects are removed. The definition of a subsidy under
Article 1.1 and other Appellate Body findings concerning the "life" of subsidy suggest, when
the recipient is n o longer able to lower the price of products by using the benefit, a Member
would then not be further asked to remove anything else. The function of R&D subsidies
contemplates that its benefit will normally be consumed, as the recipient sells the resulting
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.
4. The Appellate Body must carefully consider whether LA/MSF subsidies that had "expired"
through the "amortization of benefit", as found by the Compliance Panel, may, as a matter of
law, be considered tantamount to the removal of the benefit in connection with the projected
period or sales amount properly anticipated by the granting Member when the su bsidy was
granted.

ANNEX D
PROCEDURAL RULINGS
Contents Page
Annex D-1 Procedural ruling of 25 October 2016 regarding additional procedures
to protect business confidential information (BCI) and highly sensitive
business information (HSBI)
52
Annex D-2 Procedural ruling of 21 November 2016 regarding the inclusion of an
individual to the European Union's BCI/HSBI Approved Persons List
60
Annex D-3 Procedural ruling of 21 November 2016 regarding the designation of
BCI in the United States' other appellant's submission
62
Annex D-4 Procedural ruling of 11 January 2017 regarding the European Union's
request to modify the deadline for filing its appellee's submission
64
Annex D-5 Procedural ruling of 19 April 2017 regarding public observation of the
oral hearing
66

ANNEX D-1
PROCEDURAL RULING OF 25 OCTOBER 2016
1. On 13 October 2016, the Chair of the Appellate Body received a joint letter from the
European Union and the United States requesting the Appellate Body Division hearing this appeal
to adopt additional procedures to protect business confidential information (BCI) and highly
sensitive business information (HSBI) in these appellate proceedings. In their letter, the
European Union and the United States suggested that the additional procedures adopted by the
Appellate Body in the appeal in United States – Measures Affecting Trade in Large Civil Aircraft
(2nd complaint) (WT/DS353), with certain modifications, should form the basis for any procedural
ruling on confidentiality in these appellate proceedings. They argued, inter alia, that disclosure of
certain sensitive information on the record of the Panel proceedings would be severely prejudicial
to the large civil aircraft manufacturers concerned, and possibly to their customers and suppliers.
2. On behalf of the Division hearing this appeal, the Chair of the Appellate Body invited the
third participants to comment in writing on the joint request by th e European Union and the
United States by 12 noon on Wednesday, 19 October 2016. He also informed the participants and
the third participants that pending a final decision on the joint request by the participants, the
Division had decided to provide interim additional protection to all BCI and HSBI transmitted to the
Appellate Body in this dispute on the terms set out below:
(a) Only Appellate Body Members and Appellate Body Secretariat staff assigned to
work on this appeal may have access to the BCI and HSBI contained in the Panel
record pending a final decision on the joint request. Appellate Body Members and
Appellate Body Secretariat staff shall not disclose BCI or HSBI, or allow either to
be disclosed to any person other than those identified in the preceding sentence.
(b) BCI shall be stored in lo cked cabinets when not in use. When in use by
Appellate Body Members and Appellate Body Secretariat staff assigned to work on
this appeal all necessary precautions will be taken to protect the confidentiality of
the BCI.
(c) All HSBI shall be stored in a comb ination safe in a designated secure location in
the offices of the Appellate Body Secretariat. Appellate Body Members and
Appellate Body Secretariat staff assigned to work on this appeal may view HSBI
only in the designated secure location in the offices o f the Appellate Body
Secretariat. HSBI shall not be removed from this location.
(d) Pending a decision on the joint request for the protection of BCI/HSBI in these
proceedings, neither BCI nor HSBI shall be transmitted electronically, whether by
e-mail, facsimile, or otherwise.
3. On Wednesday, 19 October 2016, written comments were received from Australia, Brazil,
Canada, and China. Australia and Brazil did not object to the joint request made by the
participants, but requested that the Appellate Body ensure that the rights of third participants are
taken into account in setting the working schedule for this appeal. China stated that it had no
comments regarding the request for additional protection of BCI/HSBI. For its part, Canada stated
that, while it agrees that additional procedures for the protection of confidential information are
warranted by the specific facts of this case, it considers that the procedures proposed by the
participants may not provide third participants with effective access to the BCI they need to
adequately prepare and present their positions. In particular, Canada submitted that the
procedures set out an overly onerous method for capital -based Third Participant BCI -Approved
Persons to obtain access to BCI, and that in previous proceedings where similar procedures were
adopted, Canadian Geneva -based BCI -Approved Persons were required to spend many hours
transcribing BCI in the designated reading room and then to spend an equivalent amount of time
discussing this BCI with capital -based BCI-Approved Persons. Canada therefore propose d that any
additional procedures specify that, in addition to the "designated reading room" on the premises of
the WTO, there be a "designated reading room" located in an embassy or other diplomatic miss ion
of a participant in the capital of each of the third participants, where capital -based Third
Participant BCI -Approved Persons can obtain effective access to BCI. According to Canada, this
would ensure that third participants' rights to meaningfully par ticipate in these appellate
proceedings are fully protected.

4. On Friday, 21 October 2016, the Division invited the participants and other third
participants to comment, if they so wished, on Canada's request regarding access to BCI by 5:00
PM on Monday, 24 October 2016. Comments were received from Australia, Brazil, the
European Union, and the United States.
5. Australia supported Canada's proposal. Australia stated that it recognises the importance
of protecting sensitive information, while facilitating the m eaningful participation of third
participants in these appellate proceedings. Brazil indicated that it had no comments regarding
Canada's request.
6. The European Union submitted that Canada's request calls for an additional 12
designated reading rooms in the missions of the European Union and the United States in the
capitals of each third participant, in addition to the designated reading room at the WTO.
According to the European Union, this would impose significant additional burdens on the
participants. In particular, the European Union submitted that the adjustment proposed by Canada
would require that, for each of the six third participants, the participants would have to: (i) identify
an appropriate contact person in each mission; (ii) designate those a ppropriate persons as BCI
approved; (iii) communicate with them and explain what is envisaged; (iv) obtain appropriate and
necessary internal authorisations; (v) identify and set aside appropriate secure locations; (vi)
identify and set aside appropriate designated reading rooms; (vii) securely transmit to them all the
relevant documents; (viii) arrange for copies of the necessary documents to be made; (ix) make
arrangements for the appropriate monitoring and surveillance of the designated reading room
during use; (x) provide appropriate training to the staff involved; and (xi) make appropriate
additional arrangements for the return or destruction of the materials involved at the appropriate
time. The European Union indicated that it was therefore opposed to Canada's request. It agreed,
however, that third participants could be provided with some additional time to prepare their
third participants' submissions. According to the European Union, this would meet the concern
raised by Canada, while avoiding the i mposition of unnecessary and substantial costs on the
participants.
7. The United States argued, as did the European Union, that Canada's proposal would
require a total of 12 new BCI reading rooms – one for each of the two participants in six different
cities. According to the United States, this would require identifying officials at each site to
maintain control over documents containing BCI and to monitor third participant officials during
the review of the documents, and providing training to those indivi duals regarding their
responsibilities under the BCI/HSBI procedures. The United States considered that this would
impose a significant burden on the participants, with little benefit to the third participants. In
particular, the United States argued that Canada's proposal would not have a meaningful effect on
the burden placed on third parties because even under the proposal, a capital -based official would
still need to review the BCI and take notes as to the relevant information in the reading room, just
as under the original rules. Moreover, to the extent that an official considered BCI to be relevant to
a third participant's submission, that official would still need to discuss the annotated information
with colleagues to prepare and finalize the third p articipant submission, just as under the original
rules. The United States noted that the only difference is that under the adjustment proposed by
Canada, capital-based officials would review the BCI instead of Geneva-based officials. In so doing,
according to the United States, Canada's proposal appeared to merely shift the burden of
reviewing BCI from Geneva -based officials to capital -based officials, rather than reducing the
burden in a meaningful way. For these reasons, the United States opposed Canada's request and
asked the Appellate Body to adopt the same procedures governing third participants' access to BCI
as it did in the original appellate proceedings.
8. The Division has made the following ruling having considered the arguments made by the
European Union and the United States in support of their request, and the comments received
from the participants and third participants:
9. As an initial matter, w e recall that the Appellate Body adopted additional procedures to
protect the confidentiality o f sensitive information in the appellate proceedings in
United States ‒ Measures Affecting Trade in Large Civil Aircraft (2 nd complaint) as well as in the
original proceedings in this dispute. In this appeal, the participants suggested that the additional
procedures adopted by the Appellate Body in United States – Measures Affecting Trade in Large
Civil Aircraft (2nd complaint) should form the basis for any procedural ruling on confidentiality, and
identified certain modifications that could be made to those additional procedures. We further note

that the participants and the third participants involved in this case are the same as those involved
in United States – Measures Affecting Trade in Large Civil Aircraft (2 nd complaint). In the
Procedural Ruling ado pted in United States – Measures Affecting Trade in Large Civil Aircraft
(2nd complaint), the Appellate Body explained the considerations relevant to a decision on whether
to provide additional protection to certain sensitive information 1. We believe that those
considerations are also relevant to our evaluation of t he request made by the European Union and
the United States in this appeal and we briefly recall them before addressing the specific points
raised in the joint request and in the comments of the third participants.
10. The confidentiality requirements set out in the Understanding on Rules and Procedures
Governing the Settlement of Disputes (the "DSU") and in the Rules of Conduct for the
Understanding on Rules and Procedures Governing the Settlement of Disputes (the " Rules of
Conduct")2 are stated at a high level of generality that may need to be particularized in situations
in which the nature of the information provided requires more detailed arrangements to protect
the confidentiality of that information. The adoption of such arrangements falls within the authority
of the Appellate Body to hear the appeal and to regulate its procedures in a manner that ensures
that the proceedings are conducted with fairness and in an orderly manner. To the extent tha t the
arrangements elaborate on the confidentiality requirements of the DSU, the adoption of such
arrangements in an "appropriate procedure" needs to conform to the requirement in Rule 16(1) of
the Working Procedures, that any additional "appropriate proce dure" not be inconsistent with the
DSU, the other covered agreements, and the Working Procedures themselves.
11. The determination of whether particular arrangements are appropriate in a given case
essentially involves a balancing exercise: the risks associate d with the disclosure of the
information sought to be protected must be weighed against the degree to which the particular
arrangements affect the rights and duties established in the DSU, the other covered agreements,
or the Working Procedures. Furthermore, a relationship of proportionality must exist between the
risks associated with disclosure and the measures adopted. Participants requesting particularized
arrangements have the burden of justifying that such arrangements are necessary in a given case
adequately to protect certain information, taking into account the rights and duties recognized in
the DSU, the other covered agreements, and the Working Procedures. This burden of justification
will increase the more the proposed arrangements affect the exe rcise by the Appellate Body of its
adjudicative duties, the exercise by the participants of their rights to due process and to have the
dispute adjudicated, the exercise by the third participants of their participatory rights, and the
rights and systemic interests of the WTO membership at large.
12. Additional confidentiality protection implicates the authority of the Appellate Body, and
the rights and duties of the participants, third participants, and the membership at large. In the
original proceedings in this dispute and in United States – Measures Affecting Trade in Large Civil
Aircraft (2nd complaint), the Appellate Body adopted additional procedures that it considered struck
an appropriate balance between the risks associated with the disclosure of sensit ive information,
on the one hand, and the adjudicative authority of the Appellate Body and the rights and duties of
the participants, third participants and the WTO membership at large. Similar considerations are
relevant in these appellate proceedings . Th e European Union, the United States, and the third
participants concur that the additional procedures adopted in United States – Measures Affecting
Trade in Large Civil Aircraft (2nd complaint) provide an appropriate framework and ask that we
apply the same practices in this case, with certain modifications.
13. We recall that it is for the adjudicator to decide whether certain information calls for
additional protection of confidentiality. Likewise , it is for the adjudicator to decide whether and to
what extent specific arrangements are necessary, while safeguarding the various rights and duties
that are implicated in any decision to adopt additional protection. We also note, however, that
neither participant has appealed the Panel's decisions regarding the protection of BCI/HSBI and
that there are also issues of practicality to consider. We will therefore proceed on the basis of how
the information was treated before the Panel. Nevertheless, we do not exclude revisiting whether a

1 See Appellate Body Report, United States – Measures Affecting Trade in Large Civil Aircraft
(2nd complaint), Procedural Ruling and Additional Procedures to Protect Sensitive Information, Annex III,
paras. 8 and 9.
2 The Rules of Conduct, as adopted by the DSB on 3 December 1996 (WT/DSB/RC/1), are incorporated
into the Working Procedures for Appellate Review (WT/AB/WP/6), as Annex II thereto. (See WT/DSB/RC/2,
WT/AB/WP/W/2)

particular piece of information meets the objective criteria justifying additional protection, or the
particular degree thereof, should a dispute on the classification of that information arise before us,
or should we consider that we need to refer to that information in our report if this is necessary to
give a sufficient exposition of our reasoning and findings.
14. Having reaffirmed the relevant considerations that guide our decision, we turn to the
modifications requested by the participants to the BCI/HSBI procedures adopted by the
Appellate Body in United States – Measures Affecting Trade in Large Civil Aircraft (2 nd complaint).
The participants propose, inter alia, that any additional BCI/HSBI procedures in this dispute specify
that documents and materials containing BCI shall be sent to the Appellate Body Members by
means of encrypted e-mail or courier. They also propose that HSBI contained in any appendix not
be transmitted over e -mail but on a CD -ROM, labelled with an ind ication that it contains HSBI. In
addition, the participants suggest certain adjustments to provide clarity on how the electronic
version of an unredacted version of a submission by a participant and/or a third participant shall
be corrected and transmitted, including an adjustment to avoid accidental inclusion of BCI in third
participant submissions.
15. The arrangements that the participants have jointly proposed do not appear to affect the
Appellate Body's ability to adjudicate the dispute, the rights of the third participants to be heard,
or the rights and interests of the WTO membership at large. We have reflected them in the
additional procedures that we adopt below. These procedures ensure that Members of the
Appellate Body have sufficient access to the entirety of the Panel Report, the submissions, and the
record of the dispute. They also limit the risk of inadvertent disclosure of sensitive information and
render the process of correcting and transmitting redacted version of submissions more efficient.
16. We have carefully considered Canada's proposal regarding access by third participants to
BCI in capitals, as well as the comments received from the participants and other third
participants. It is our responsibility, in adopting any additional procedures, to strike an appropriate
balance between the risks associated with the disclosure of sensitive information, the adjudicative
duties of the Appellate Body, and the rights of the participants and third participants. While
adoption of procedures such as those suggested by Canada may well facilitate access to BCI, we
recall that the rights of third participants are more limited than those of the participants, and that
third participants' interests lie mainly in the correct legal interpretation of the provisions of the
WTO agreements.3 Moreover, as highlighted in the comments received from the participants, it
would be difficult to design and implement a regime whereby there would be a "designated reading
room" located in an embassy or other diplomatic mission of a participant in the capital of each of
the third participants. For these reasons, we have decided therefore not to adopt the adjustment
proposed by Canada. However, we will ensure that the rights of third participants are taken into
account in these appel late proceedings, including when we set the working schedule for
this appeal.
17. Finally, we note, as we did in the original proceeding s and in United States – Measures
Affecting Trade in Large Civil Aircraft (2 nd complaint), that we will make every effort t o draft our
report without including sensitive information. T he additional procedures that we adopt below
foresee that the participants will be provided in advance with a copy of the Appellate Body report
intended for circulation to WTO Members and will ha ve an opportunity to request the removal of
any sensitive information that is inadvertently included in the report. If we were to consider it
necessary to include sensitive information in the reasoning in our report, the participants will be
given an opportunity to comment. We reiterate that the participants will have a timely opportunity
to comment as to the inclusion of any sensitive information in the report; we will provide further
guidance at a later point in these proceedings as to the modalities and details of such a procedure.
18. For the reasons set out above, we have decided to provide additional confidentiality
protection on the terms set out below. Accordingly, we adopt the following additional procedures
for the purposes of this appeal:

3 See Appellate Body Report, European Communities and Certain Member States – Measures Affecting
Trade in Large Civil Aircraft, Procedural Ruling and Additional Procedures to Protect Sensitive Information,
Annex III, para. 11.

Additional Procedures to Protect Sensitive Information
General
(i) These additional procedures shall apply to information that was treated as
business confidential information (BCI) or as highly sensitive business information (HSBI) in the
Panel proceedings and that is c ontained in documents or electronic media that are part of the
Panel record. The additional procedures apply to written and oral su bmissions made in the
appellate proceedings only to the extent that they incorporate information that was treated as BCI
or HSBI in the Panel proceedings.
(ii) To the extent that information on the record is submitted to the
Appellate Body in a form that differs from the way in which it was presented to the Panel, and
there is a disagreement between the participants on the proper tre atment of this information, the
Appellate Body shall decide after hearing their views.
(iii) Each participant may at any time request that information that it has
submitted and that was previously treated as BCI or HSBI no longer be treated as such.
(iv) The participants and third participants shall file their written submissions
and executive summaries with the Appellate Body Secretariat in accordance with the Working
Schedule drawn up by the Division for this appeal. Where a written submission and/or an
executive summary contain BCI or HSBI, redacted versions of the submission and/or the executive
summary (that is, a version without BCI and HSBI) shall be filed simultaneously with the
Appellate Body Secretariat. Should an executive summary submitted by participants a nd third
participants contain BCI or HSBI, the redacted version of the executive summary will be annexed
as addenda to the Appellate Body Report. The redacted version shall be sufficient to permit a
reasonable understanding of the substance of the relevant document. The Division may take
appropriate action to ensure that this obligation is satisfied. The participants and third participants
shall also provide the Appellate Body Secretariat with an electronic version of all submissions,
including the redacted versions. The transmittal of participants' submissions to each other and to
the third participants, and the transmittal of third participants' submissions to the participants and
to the other third participants, are further regulated in the provisions bel ow which apply mutatis
mutandis to executive summaries of written submissions.
Appellate Body Members and Appellate Body Secretariat Staff
(v) Only Appellate Body Members, and staff of the Appellate Body Secretariat
who have been assigned by the Appellate Body to work on this appeal, may have access to the BCI
and HSBI on the Panel record and in the written and oral submissions made in these appellate
proceedings. Appellate Body Members and assigned Appellate Body Secretariat staff shall not
disclose BCI or HSBI, or allow either to be disclosed, to any person other than those identified in
the preceding sentence or to approved persons of the participants and third participants.
Appellate Body Members and assigned Appellate Body Secretariat staff are covered by the Rules of
Conduct. As provided for in the Rules of Conduct , evidence of breach of these Rules may be
submitted to the Appellate Body, which will take appropriate action.
(vi) BCI shall be stored in locked cabinets when not in use.
(vii) Appellate Body Members who are serving on the Division hearing this
appeal may maintain a copy of all relevant documents containing BCI at their places of residence
outside Geneva. Appellate Body Members who are not serving on the Division may maintain at
their places of residence outside Geneva a copy of the BCI version of the Panel Report, a copy of
the BCI version of the written submissions made in these appellate proceedings, a BCI version of
the transcripts of any oral hearings, any internal documents containing BCI, and, where necessary,
selected BCI exhibits from the Panel record. The documents and materials containing BCI kept by
Appellate Body Members at their places of residence outside of Geneva shall be stored in locked
cabinets when not in use. Documents and materials containing BCI shall only be sent to
Appellate Body Members by secure e-mail or courier.

(viii) Participants shall provide printed copies of their submissions and other
documents containing BCI that are intended for use by Appellate Body Members or assigned
Appellate Body Secretariat staff on coloured paper and individually watermarked with
"Appellate Body" and numbered consecutively (" Appellate Body No. 1", " Appellate Body No. 2",
etc.).
(ix) All HSBI shall be stored in a combination safe in a designated secure location on the
premises of the Appellate Body Secretariat. Any computer in that room shall be a stand -alone
computer, that is, a computer not connected to a network. Appellate Body Members and assigned
Appellate Body Secretariat staff may view HSBI only in the designated secure location referred to
above. HSBI shall not be removed from this location, except as provided for in paragraph (x), or in
the form of handwritten notes that may be used only on the Appellate Body Secretariat's premises
and shall be destroyed once no longer used.
(x) Subject to appropriate precautions, BCI and HSBI may be taken outside of
the premises of the Appellate Body Secretariat, in hard copy and electronic form, for purposes of
any oral hearings that may be held in connection with this appeal.
(xi) Except as provided for in paragraph (xii), all documents and electronic files
containing BCI and HSBI shall be destroyed or deleted when the Appellate Body report in this
dispute has been adopted by the DSB.
(xii) The Appellate Body shall retain one hard copy and one electronic version of
all documents containing BCI and HSBI as part of the appellate record. Documents and electronic
media containing BCI shall be kept in sealed boxes within locked cabinets on the Appellate Body
Secretariat's premises. Documents and e lectronic media containing HSBI shall be placed in a
sealed container that will be kept in a combination safe on the premises referred to above.
Appellate Body Report
(xiii) The Division will make every effort to draft an Appellate Body report that
does not disclose BCI or HSBI by limiting itself to making statements or drawing conclusions that
are based on BCI and HSBI. A copy of the Appellate Body report intended for circulation to WTO
Members will be provided in advance to the participants , at a date and in a manner to be specified
by the Division. Participants will be provided with an opportunity to request the removal of any BCI
or HSBI that is inadvertently included in the report. The Division will also indicate to the
participants if it has found it necessar y to include in the Appellate Body report information that
was treated by the Panel as BCI or HSBI and will provide participants with an opportunity to
comment. Comments on the inclusion of information previously treated as BCI or HSBI and
requests for rem oval of BCI or HSBI inadvertently included in the report shall be filed with the
Appellate Body Secretariat within a time period to be specified by the Division. No other comments
or submissions shall be accepted. In coming to a decision on the need to inc lude BCI or HSBI to
ensure that the final report is understandable, the Division will strike an appropriate balance
between the rights of the WTO membership at large to obtain a report that gives a sufficient
exposition of its reasoning and findings, on th e one hand, and the legitimate concerns of the
participants to protect sensitive information, on the other.
Participants
(xiv) The participants shall provide a list of persons that are "BCI -Approved
Persons" and that are "HSBI-Approved Persons". These lists shall be provided to the
Appellate Body Secretariat by 5 p.m. on Thursday, 27 October 2016, and shall be served on the
other participant and the third participants. Any objections to the designation of an outside advisor
as a BCI -Approved Person or HSBI -Approved Person must be filed with the Appellate Body
Secretariat and served on the other participant by 5 p.m. on Monday, 31 October 2016.
Participants may submit amendments to their lists of BCI -Approved Persons or HSBI -Approved
Persons by filing an amended list with the Appellate Body Secretariat and serving it on the other
participant and the third participants. A participant may object to the designation on the amended
list of an outside advisor by another participant . Any objections must be filed with the
Appellate Body Secretariat within two days and simultaneously served on the other participant and
the third participants. The Division will reject a request for designation of an outside advisor as a

BCI-Approved Person or an HSBI -Approved Person only upon a showing of compelling reasons,
having regard to, inter alia , the relevant principles reflected in the Rules of Conduct and the
illustrative list in Annex 2 thereto. BCI -Approved Persons and HSBI -Approved Perso ns shall not
disclose BCI or HSBI, or allow either to be disclosed, except to th e Appellate Body, assigned
Appellate Body Secretariat staff, other BCI -Approved Persons and HSBI -Approved Persons, and
Third Participant BCI-Approved Persons.
(xv) Any participant referring in its written submissions to any BCI or HSBI shall
clearly identify the information as such in those submissions. If the submissions contain HSBI, the
HSBI shall be included in an appendix. In that case, the version of the submission that includes the
HSBI appendix shall be transmitted only to HSBI -Approved Persons. The HSBI appendix shall not
be transmitted via e -mail, but solely on a CD -ROM, labelled with an indication that it contains the
HSBI appendix. Each participant shall simultaneously provide a redacted version of its submissions
to the other participant. Submissions containing BCI, and redacted versions of submissions, shall
be transmitted only to BCI -Approved Persons of the other participant . The other participant shall
have two days to object to the inclusion of any BCI. If there are objections, the Division shall
resolve the matter, and instruct, as appropriate, the relevant participant to transmit a correctly
redacted version of its submission to the other participant and the third par ticipants, unless the
participant concerned agrees to remove the information that was subject to the objection. The
electronic copy of the unredacted version of the submission shall be corrected by the participant
according to the Division's resolution of the matter and re -transmitted to the Appellate Body
Secretariat and other participant; the Appellate Body shall direct BCI -Approved Persons to
implement modified confidentiality treatment in any paper copies of the submission as well as to
replace the electronic copies. If there are no objections, the redacted version shall be transmitted
the following day to the third participants.
Third Participants
(xvi) Third participants may designate up to eight individuals as "Third
Participant BCI-Approved Persons". For this purpose, each third participant shall provide a list of
Third Participant BCI-Approved Persons to the Appellate Body Secretariat by 5 p.m. on Thursday,
27 October 2016. A copy of the list of Third Participant BCI -Approved Persons shall be served on
each participant and on each other third participant. The participants may object to the
designation of an outside advisor as a Third Participant BCI-Approved Person. Objections must be
filed with the Appellate Body Secretariat by 5 p.m. on Monday, 31 October 2016. Third participants
may submit amendments to their lists of BCI -Approved Persons or HSBI -Approved Persons by
filing an amended list to the Appellate Body Secretariat and serving it on the p articipants and the
other third participants. A participant may object to the designation in an amended list of an
outside advisor by a third participant. Any objections must be filed with the Appellate Body
Secretariat within two days and simultaneously served on the other participant and the third
participants. The Division will reject the designation of an outside advisor as a Third Participant
BCI-Approved Person only upon a showing of compelling reasons, having regard to, inter alia, the
relevant principles in the Rules of Conduct and the illustrative list in Annex 2 thereto. Third
Participants BCI-Approved Persons shall not disclose BCI, or allow it to be dis closed, except to the
Appellate Body, assigned Appellate Body Secretariat staff, BCI -Approved Persons, and other
Third Participant BCI-Approved Persons.
(xvii) The BCI version of all participants' submissions shall be transmitted to the
third participants by providing a copy to the Appellate Body Secretariat for placement in the
designated reading room located on the premises of the W TO. Third Participant BCI -Approved
Persons shall be allowed to view in the designated reading room the BCI version of the Panel
Report and the BCI version of the submissions filed in these appellate proceedings. Third
Participant BCI -Approved Persons shall not bring into that room any electronic recording or
transmitting devices, nor shall they remove copies of the BCI version of the Panel Report or the
BCI version of the submissions from that room. Upon request, each third participant shall be
provided with one copy of the Panel Report as circulated to WTO Members and of the redacted
version of the submissions for use in the reading room. Third Participant BCI -Approved Persons
may take handwritten notes on the provided copies of the circulated Panel Report and redacted
version of the submissions and they may take these copies with them. These documents shall be
printed on coloured watermarked paper; shall bear the names of the Third Participant BCI -
Approved Persons; state that "This document is not to be cop ied"; and the cover page of each of
the documents shall state that any handwritten BCI added to the document shall only be discussed

or shared with other Third Participant BCI -Approved Persons. The content of any handwritten
notes shall not be incorporated , electronically or in handwritten form, into any other copy of the
Panel Report or of the submissions. These documents and any other handwritten notes taken by
the Third Participant BCI -Approved Persons in the reading room shall be locked in a secure
container when not in use. These documents and handwritten notes must be returned to the
Appellate Body Secretariat after the final oral hearing held in this appeal.
(xviii) Each Third Participant BCI-Approved Person viewing the BCI version of the
Panel Report and sub missions in the designated reading room shall complete and sign a log. The
Appellate Body Secretariat shall keep such log as part of the record of the appeal.
(xix) Third participants shall transmit their submission to the Appellate Body
Secretariat and the part icipants. It shall also be transmitted to the other third participants by
providing a copy to the Appellate Body Secretariat for placement in the designated reading room
referred to in paragraph (xvii) above. If a third participant wishes to refer in its third participant's
submission to any BCI, it shall clearly identify such information. A third participant referring to BCI
shall also simultaneously provide the participants with a redacted version of its submission. Third
participant's submissions containing BCI, and redacted versions of submissions, shall be
transmitted only to BCI-Approved Persons of the participants. The participants shall have two days
to object to the inclusion of any BCI in a third participant's submission. If there are objections, the
Division shall resolve the matter, and instruct, as appropriate, the relevant third participant to
transmit a correctly redacted ve rsion of its submission to each of the participants and the other
third participants, unless the third participant concerned agrees to remove the information that
was subject to the objection. The electronic copy of the unredacted version of the submission shall
be corrected by the third participant according to the Division's resolution of the matter and re -
transmitted to the Appellate Body Secretariat and the participants; the Appellate Body shall direct
BCI-Approved Persons to implement modified confiden tiality treatment in any paper copies of the
submission as well as to replace the electronic copies. If there are no objections, the submission or
the redacted submission, as the case may be shall be transmitted the following day to the other
third participants and again to the participants.
Oral Hearing
(xx) Appropriate procedures shall be adopted to protect BCI and HSBI from
unauthorized disclosure at any oral hearing held in this appeal.

ANNEX D-2
PROCEDURAL RULING OF 21 NOVEMBER 2016
1. On 31 October 2016, the Appellate Body Division hearing the above appeal received a
communication from the United States provisionally objecting to the inclusion of
Prof. Andreas Klasen on the European Union's proposed list of BCI - and HSBI-Approved Persons.
The United States requested the Division to ask the European Union to provide further information
concerning Prof. Klasen's employment by the European Aeron autic Defence and Space
Company N.V. (EADS), whether he has ongoing involvement with Airbus in his current position,
and the reason he would need access to BCI and HSBI.
2. On 1 November 2016, the Division invited the European Union to respond to the
United States' provisional objection, an d informed the participants and third participants that, in
the meantime, the European Union's access to BCI and HSBI on the Panel Record and in written
submissions in these appellate proceedings shall be restricted to the other individuals on the
European Union's list of BCI -Approved Persons and HSBI -Approved Persons, date d
27 October 2016.
3. On 2 November 2016, the Division received a response from the European Union
commenting on the United States' provisional objection, and providing some additional information
regarding Prof. Klasen, including his full curriculum vitae. The European Union indicated, inter alia,
that Prof. Klasen "is providing external advice for the European Union as well as the
European Union's underlying interests in this case (Airbus)".
4. On 3 November 2016, the Division invited the United States to respond to the letter received
from the European Union. On 7 November 2016, the United States reitera ted its request for
further information regarding Prof. Klasen. The United States explained that "knowing whether and
to what extent Prof. Klasen continues to undertake work for Airbus is critical to an understanding
of whether his access to Boeing BCI and HSBI would give Airbus an unfair advantage in areas
outside of this proceeding." The European Union responded to the United States' letter on
11 November 2016, at the request of the Division. In its letter, the European Union reiterated that
Prof. Klasen "is an expert who has been providing advice for the European Union and its underlying
interests in this case (Airbus) ", and that the European Union wishes to retain the possibility of
including him in its delegation for that purpose. The European Union further requested that we
confirm Prof. Klasen's designation as BCI- and HSBI-approved.
5. On 16 November 2016, the Division invited the European Union to indicate whether
Prof. Klasen is subject to an enforceable code of professional ethics that requires hi m to protect
confidential information, or whether he has been retained by an outside advisor who is subject to
such a code of professional ethics and assumes responsibility for compliance with the additional
BCI/HSBI procedures adopted by the Appellate Body in these proceedings.
6. On 18 November 2016, the European Union confirmed that Prof. Klasen has been retained
by an outside advisor who is subject to an enforceable code of professional ethics and assumes
responsibility for compliance with the additional BCI/HSBI proc edures adopted by the
Appellate Body in these proceedings. The European Union added that it has responsibility,
according to the applicable rules, for the constitution and conduct of its delegation, including all of
its representatives and outside advisors.

7. We recall that pursuant to paragraph 18(xiv) of our Procedural Ruling of 25 October 2016,
the Division will reject a request for designation of an outside advisor as a BCI -Approved Person or
an HSBI-Approved Person only upon a showing of com pelling reasons, having regard to, inter alia,
the relevant principles reflected in the Rules of Conduct for the Understanding on Rules and
Procedures Governing the Settlement of Disputes and the illustrative list of information to be
disclosed in Annex 2 thereto. We further recall that the same paragraph mandates tha t
BCI-Approved Persons and HSBI -Approved Persons shall not disclose BCI or HSBI, or allow either
to be disclosed, except to the Appellate Body, assigned Appellate Body Secretariat staff, other
BCI-Approved Persons and HSBI-Approved Persons, and Third Participant BCI-Approved Persons.
8. In light of the clarifications provided by the European Union, we see no compelling reason to
reject the European Union's request to designate Prof. Klasen as a BC I- and HSBI -Approved
Person. We therefore consider it appropriate to accept the European Union's request. Accordingly,
the European Union's access to BCI and HSBI on the Panel record and in written submissions in
these appellate proceedings stands extended to Prof. Klasen as a BCI- and HSBI-Approved Person
in addition to the other individuals on the European Union's list of BCI -Approved Persons and
HSBI-Approved Persons, dated 27 October 2016.

ANNEX D-3
PROCEDURAL RULING OF 21 NOVEMBER 2016
1. On 14 November 2016, we received a letter from the European Union requesting that
certain text in the United States' other appellant's submission be designated as business
confidential information (BCI). On 15 November 2016, the Division invi ted the United States to
respond to the European Union's request. The United States responded in writing on 16 November
2016, indicating that it d id not object to the changes proposed by the European Union to
paragraphs 36, 52, 64, and 69 of the United Sta tes' other appellant's submission. However, the
United States objected to the other changes proposed by the European Union (to paragraphs 35,
37, 41, 43, 45, 47, 49, 51, 53, 55, and 60) arguing that the European Union was proposing to
designate certain information as BCI, even though that information could already be derived from
information on the Panel record that the European Union previously did not designate as BCI or
HSBI. The United States indicated that , upon resolution of this issue by the Appellat e Body, it was
prepared to submit revised BCI and BCI -redacted versions of its other appellant's submission and
that two days after the Appellate Body's ruling would be sufficient time to complete this task.
2. In our Procedural Ruling of 25 October 2016, we surveyed considerations that are relevant
to a decision on whether to provide additional protection to certain sensitive information. We
believe that these considerations are also relevant to our evaluation of the European Union's
request that certain text in the United States' other appellant’s submission be designated as BCI.
3. As an initial matter, we recall that the determination of whether particular arrangements are
appropriate in a given case involves a balancing exercise: the risks associated with th e disclosure
of the information sought to be protected must be weighed against the degree to which the
particular arrangements affect the rights and duties established in the DSU and the other covered
agreements. Furthermore, a relationship of proportionality must exist between the risks associated
with disclosure and the measures adopted. It is ultimately for the adjudicator to decide whether
certain information calls for additional protection of confidentiality, while safeguarding the various
rights and d uties that are implicated in any decision to adopt additional protection . This involves
striking an appropriate balance between the risks associated with the disclosure of sensitive
information, the adjudicative duties of the Appellate Body, and the rights of the participants and
third participants.
4. The changes to BCI bracketing proposed by the European Union d o not appear to affect our
ability to hear this appeal or the due process rights of the participants, both of which have access
to BCI and HSBI. With regard to the rights of third participants , we further recall that, in
accordance with paragraph 18(xvii) of our Procedural Ruling of 25 October 2016, Third Participant
BCI-Approved Persons may view in the designated reading room the BCI version of th e
submissions filed in these appellate proceedings. As we see it, this ensures that third participants
have sufficient access to the entirety of the information contained in the United States' other
appellant's submission, which the European Union consider s should be subject to additional
protection.
5. We further note that t he United States does not object to the changes proposed by the
European Union to paragraphs 36, 52, 64, and 69 of the United States' other appellant's
submission. In particular, the United States has not objected to the European Union's request to
designate as BCI the four words that the European Union has included between the additional
brackets in each of the bullet points following paragraph 69 of the BCI -version of the
United States' other appellant's submission, consistent with the designation of the terms of
Section 21.14 of the UK A350XWB Repayable Investment Agreement as BCI. Nor has the
United States objected to the inclusion between additional brackets of the same four words in
paragraph 64 of the United States' other appellant's submission, consi stent with the designation of
the terms of Section 11 of the Spanish A350XWB Convenio as BCI.

6. With respect to the French A350XWB Protocole, we note that the four words at issue speak
more to the substantive content of Articles 8 and 9, designated as conta ining BCI, rather than to
the headers of those provisions, which, as the United States points out, have not been designated
as containing BCI.
7. With respect to the German KfW A350XWB Loan Agreement, while we agree with the United
States that the language t o which it refers might provide a basis to derive the information which
the European Union now seeks to have designated as BCI, we note that this information cannot be
found in the Panel Report circulated to WTO Members on 22 September 2016. Nor, as we
understand it, has it been argued that this information would have otherwise come into the public
domain, or that it would no longer be confidential due to the passage of time.
8. We note, moreover, that there are also issues of practicality to consider. Having considered
the European Union's request and the re sponse received from the United States, we have decided
to proceed on the basis of the BCI bracketing proposed by the European Union . Nevertheless, we
do not exclude revisiting whether a particular piece of such information meets the objective criteria
justifying additional protection, or the particular degree thereof, should we consider that we need
to refer to that information in our report in this dispute if this is necessary to give a sufficient
exposition of our reasoning and findings. However, we reiterate that, if we were to consider it
necessary to do so, the participants will be given a timely opportunity to comment.
9. We would request the United States to kindly submit revised copies of the BCI and no n-BCI
versions of its other appellant's submission to the Appellate Body Secretariat and the European
Union, and copies of the non -BCI version of its other appellant's submission, with BCI correctly
redacted, to each of the third participants, by 5 p.m. on Wednesday, 23 November 2016. There is
no need to resubmit the HSBI Appendix. We further request the BCI -Approved Persons of each of
the participants to implement modified confidentiality treatment, as outlined above, in any paper
copies of the United States' other appellant's submission, and to replace electronic copies.

ANNEX D-4
PROCEDURAL RULING OF 11 JANUARY 2017
1. On Friday, 6 January 2017, we received a communication from the European Union
requesting that the Division modify the deadline for the filing of the appellees' submissions in the
present dispute. In its letter, the European Union invokes Rule 16(2) of the Working Procedures for
Appellate Review1 (Working Procedures), and seeks to have this deadline extended by one week
from 13 January 2017 to 20 January 2017. According to the European Union, strict adherence to
the time periods set by the Division would result in manifest unfairness within the meaning of
Rule 16(2). We understand that the United States and the third participants in this dispute were
served a copy of the European Union's request.
2. The European Union highlighted that the reasons for its request are similar to those given by
the United States in support of its request for extension of the deadline for fili ng its appellant's
submission in US – Tax Incentives (WT/DS487). In particular, the European Union submitted that
the staff assigned to the appeals in US – Tax Incentives and in the current dispute is to a large
extent the same, and prepar ation and filing of submissions in these two related and demanding
appeals poses a significant challenge for the European Union's resources. Moreover, the
European Union argued that the absence of key staff during the holiday period has significantly
impaired the preparation and revision of the European Union's appellee's submission in the present
appeal. The European Union also noted that the current working schedule has left it with
approximately two months to respond to the United States' other appellant's submission – which
includes several aspects of a lengthy panel report – as well as to ensure proper marking of
business confidential information (BCI) and highly sensitive business confidential information
(HSBI).
3. Also on 6 January 2017, the Division invited the United States and the third participants to
comment in writing on the communication from the European Union by 12:00 p.m. on
Tuesday, 10 January 2017. Written comments were received from the Australia, Canada, and the
United States. Australia requested that to the extent the Division were to grant the
European Union's request , it also provide third participants with additional time to review and
consider the participants' submissions prior to filing their own submissions. Canada made a similar
request asking the Division to extend the deadline for filing of the third participants' submissions
from 31 January 2017 to 7 February 2017, should it grant the request made by the
European Union. No comments were received from the other third participants.
4. In its written comments, the United States opposed the European Union's request for an
extension of the deadline for for the filing of its appellee's submission . Referring to the reasons
given by the Division in US – Tax Incentives for its denial of the United States' re quest for
extension of the deadline for the filing of its appellant's submission, the United States did not see a
basis for granting the European Union's request in the present case. In particular, the
United States observed that its staff faces the same c hallenges as the European Union's staff in
filing submissions in US – Tax Incentives and the present dispute. Moreover, the United States
noted that the European Union's appellee's submission in this appeal responds to a submission
that is considerably sho rter than the one to which the United States' appellee's submission has to
respond in US – Tax Incentives.
5. We observe that the European Union filed its appeal in the present dispute on
13 October 2016. In response to a joint letter by the European Union and the United States, the
Division hearing this appeal suspended the deadline for the filing of the appellant's submission
pending the adoption of additional procedures to protect sensitive information included in the
record of this dispute. On 25 October 2016, the Division adopted a procedural ruling to protect
sensitive information. On 1 November 2016, the Division communicated to the participants and
third participants 10 November 2016 as the filing date for the United States' other appellant's
submission. Subsequently, on 22 November 2016, the Division communicated to the participants
and third participants 13 January 2017 as the filing date for the appellees' submissions. In setting

1 WT/AB/WP/6, 16 August 2010.

these deadlines, the Division took into account, in particular, the siz e and complexity of the
present appeal, including the size of the Panel Report, and the need for inclusion of BCI and HSBI
in the participants' submissions. Furthermore, in view of the WTO end -of-year closure, the
deadline set for the filing of the appellees' submissions in the present dispute was delayed until the
second working week of 2017. Finally, notwithstanding the size of the Panel Report, the
United States' other appellant's submission to which the European Union has to respond in its
appellee's su bmission is relatively brief. We observe, in this regard, that although the
United States must, in its appellee's submission, respond to a very lengthy European Union
appellant's submission, it has not requested that the filing deadline of 13 January 2016 be
extended.
6. For these reasons, we consider that strict adherence to the time periods set by the Division
for the filing of the appellees' submissions will not result in manifest unfairness within the meaning
of Rule 16(2) of the Working Procedures, and th at it is not, therefore, necessary or appropriate to
modify the deadline for the filing of the appellees' submissions in the present dispute.
7. In these circumstances, the Division declines the European Union's request for extension of
the deadline for filing the appellees' submissions in the present appeal and, instead, affirms the
deadline for filing the appellees' submissions set for Friday, 13 January 2017.

ANNEX D-5
PROCEDURAL RULING OF 19 APRIL 2017
1. By letter dated 4 April 2017, the Appellate Body Division hearing the above appeal invited
the participants, the European Union and the United States , to indicate whether they request the
oral hearings in this appeal to be open to public ob servation, and , if so, to propose specific
modalities in this respect by 5 p.m. Geneva time on Tuesday, 11 April 2017. We also invited the
third participants to provide comment s on any requ est the participants might file, by 12 noon
Geneva time on Thursday, 13 April 2017.
2. On 11 April 2017 , we received a joint communication from the European Union and the
United States. In their letter, they propose additional procedures to protect Business Confidential
Information (BCI) and Highly Sensitive Business Informa tion (HSBI) during the oral hearings in
this appeal and request that we allow observation by the public of the oral hearing.
3. Specifically, the participants propose that we adopt the same additional procedures that the
Appellate Body adopted in United State s – Measures Affecting Trade in Large Civil Aircraft
(Second Complaint)1, pursuant to the procedural ruling dated 26 July 2011 in that appeal . They
state that the reasons for their request and proposal are substantially the same as the reasons
that were gi ven in their joint letter of 11 July 2011 requesting such additional procedures in the
conduct of the oral hearing in that appeal, which are summarized as follows:
 Only BCI -Approved Persons are authorized to access BCI, and the participants and
third participants have designated a limited number of persons as BCI -Approved. Only
HSBI-Approved Persons are authorized to access HSBI, and the participants have designated
a limited number of persons as HSBI -Approved. Third participants may not designate
HSBI-Approved Persons.
 As regards BCI that might be uttered during any segment of the hearing, the participants
recall that each of them is precluded from disclosing information designated as BCI by the
other to non-BCI-Approved persons. Similarly, as regards HSBI that might be uttered during
a hearing, the participants recall that each of them is precluded from disclosing information
designated as HSBI by the other to non -HSBI-Approved persons. Third participants are
precluded from disclosing BCI to non-BCI-Approved persons.
 Accordingly, the participants consider that, as provided for in the Additional Procedures for
the Protection of Sensitive Information set out in the Procedural Ruling dated
25 October 2016 in this appeal , the Division can and should adopt a further
Procedural Ruling pursuant to Rule 16(1) of the Working Procedures for Appellate Review 2
regulating these matters for the oral hearings. This will involve striking a balance between
the systemic interest in protecti ng sensitive information and the systemic interest in
transparency, similar to that struck in the Procedural Ruling dated 25 October 2016 in this
appeal and the Procedural Ruling dated 26 July 2011 in US – Large Civil Aircraft
(2nd complaint).
 According to the participants, there appear to be two options with respect to HSBI. The first
option is that if, during the hearing, one of the participants or a Member of the Division
wishes to refer to HSBI, the hearing would be momentarily suspended and the third
participants, as well as members of the participants' delegations who are not
HSBI-Approved, would be asked to leave the room temporarily. The second option is that
the hearing be divided into two parts. The first part would deal with all matters to the
greatest extent possible without uttering HSBI. The second part would complete the
discussion in a closed session, to the extent necessary, by addressing HSBI. While
acknowledging that neither of these options is ideal in all respects, on balance, the

1 WT/DS353/AB/R, adopted 23 March 2012. The additional procedures with respect to the oral hearing
in that appeal are set out in Annex IV to that report.
2 WT/AB/WP/6, 16 August 2010.

participants prefer the second option. The participants believe that this would limit
unnecessary disruption during the hearing. The participants also believe that careful conduct
of the first part of the hearing (such as only participants and the Members of th e Division
having a document before them and discussing it without uttering HSBI) could obviate the
need for a second HSBI part of the hearing. In the event that a second closed session of the
hearing would be necessary, it could be organized to take plac e at the end of each day. The
participants note that the Appellate Body followed this second approach during the
proceedings in EC and certain member States – Measures Affecting Trade in Large Civil
Aircraft 3 and in US – Large Civil Aircraft (2 nd complaint), and that it appears to have been
effective.
 The participants further suggest that the Appellate Body establish rules regarding a public
segment of the hearing. The participants recall that, to date, a participant's or third
participant's oral statement s and oral answers to questions have been made in public
segment only if the participant or third participant so agreed. In the absence of such
agreement, it has proved operationally possible and effective to divide the hearing into an
open session (for Me mbers who wish to make their statements public) and a closed session
(for Members who do not wish to make their statements public). The European Union and
the United States are of the view that as much of the hearing as possible should be open to
the public. However, they recognize that, in light of the volume of BCI in this dispute, and its
centrality to many of the issues, it may not be feasible to separate the Appellate Body's
questions and the participants' answers into public and BCI segments in the sa me way as
the oral statements. For this reason, the European Union and the United States propose that
the same approach be adopted in this appeal as was adopted in the appeal in US – Large
Civil Aircraft (2nd complaint).
 Thus, with regard to the public seg ment of the hearing, the participants propose that the
participants and third participants (subject to their agreement) deliver opening statements
that do not contain BCI or HSBI. These would be videotaped, reviewed by the participants
for confirmation that neither BCI nor HSBI has been uttered (with any disagreements to be
settled by the Appellate Body), and then transmitted to the public at a later date. The
participants also propose that such an approach could be used for the closing statements, or
at least that part of them that does not refer to BCI or HSBI.
4. Canada and China submitted comments on the participants' request. Canada expressed its
agreement with the joint proposal by the European Union and the United States that the Appellate
Body allow o bservation by the public of the oral hearing. China submitted that the joint proposal
by the participants to exclude non -BCI-Approved persons of the third participants from segments
of the hearing that are dedicated to questions and answers would significa ntly constrain the third
participants' abilities to engage fully in those segments. China added that, in the circumstances of
this appeal, the need for protection of sensitive information cannot sufficiently justify a complete
exclusion of non -BCI-Approved persons from hearing segments dedicated to questions and
answers. China suggested that the same procedure that is applicable for the protection HSBI from
unauthorized disclosure be followed for the protection of BCI in this appeal. In addition, China
stated that it does not want to open its statements and oral responses to the questions during the
oral hearing to the public. No comments were received from Australia, Brazil, Japan, or Korea.
5. The request of the participants raises issues similar to those tha t were before the Appellate
Body in EC and certain member States – Large Civil Aircraft and in US – Large Civil Aircraft
(2nd complaint). In this appeal, we have already adopted additional procedures for the protection
of sensitive information. Given the amount of information that was treated as BCI and HSBI during
the Panel proceedings, we believe that it would be difficult to conduct the oral hearing in these
appellate proceedings without referring to sensitive information. In carrying out our adjudicative
function, it will be necessary to conduct the oral hearing in a manner that allows us to explore
issues that involve sensitive informa tion, while ensuring that this sensitive information is not
improperly disclosed.

3 WT/DS316/AB/R, adopted 1 June 2011. The additional procedures with respect to the oral hearing in
that appeal are set out in Annex IV to that report.

6. Pursuant to our Procedural Ruling of 25 October 2016, the participants have provided a list
of persons who are authorized to have access to BCI and a list with a more limited number of
persons who are authorized to have access to HSBI. These limitations on the participants'
representatives who would be authorized to discuss BCI and HSBI during the oral hearing are
incidental to the participants' request for additional protection for sensitive information. Therefore,
only members of the participants' delegations who are BCI-Approved Persons are invited to attend
the sessions of the oral hearing in which BCI will be discussed, and only members of their
delegations who are HSBI -Approved Persons are invited to attend segments of the oral hearing
where HSBI will be discussed.
7. Moreover, under paragraph 18(xvi) of the Procedural Ruling of 25 October 2016, the third
participants have been allowed to designate up to eight individuals as Third Participant BCI -
Approved Persons. We consider this to be sufficient to all ow the third participants to be
represented properly at the oral hearing. In view of the need to provide additional protection to
BCI, only Third Participant BCI -Approved Persons are invited to attend segments of the oral
hearing where BCI may be discussed, including the question and answer sessions. Having carefully
considered the comments provided by China, we do not consider that this will unduly impinge
upon the rights of the third participants in this case.
8. Accordingly, and for reasons similar to those adopted by the Appellate Body in EC and
certain member States – Large Civil Aircraft and in US – Large Civil Aircraft (2 nd complaint), we
have decided to provide additional confidentiality protection for certain sensitive information during
the oral hearings to be held in this appeal on the terms set out below. We also authorize the public
observation of certain segments of the oral hearing as further indicated below.
Request for additional procedures to protect sensitive information during the oral
hearing
9. We are of the view that the additional procedures adopted in EC and certain member
States –Large Civil Aircraft provided adequate protection for sensitive information while allowing
the Appellate Body to perform its adjudicative function and the third participants to exercise their
rights under the Understanding on Rules and Procedures Governing the Settlement of Disputes and
the Working Procedures for Appellate Review. The participants share this view and request us to
adopt similar procedures in these proceedings. Thus, as in EC and certain member States –Large
Civil Aircraft, we consider it appropriate to adopt the following arrangements to protect sensitive
information during the oral hearing:
 The participants have indicated that they intend to absta in from mentioning BCI or HSBI in
their opening statements, and suggest that the third participants may also agree not to
mention BCI in their opening statements. In such circumstances, it is unlikely that sensitive
information will be uttered in the segme nts of the oral hearing dedicated to the delivery of
oral statements.
 Accordingly, all members of the participants' and third participants' delegations (including
non-BCI Approved persons) may attend this initial segment of the oral hearing.
 Similarly, to the extent that it is confirmed by the participants, and the third participants
also indicate, that no sensitive information will be referred to in the closing statements, all
members of the participants' and third participants' delegations may attend this final
segment of the oral hearing.
 In accordance with paragraphs xiv and xvi of our Procedural Ruling of 25 October 2016, the
participants and third participants have each designated BCI -Approved Persons, and the
participants have designated HSBI-Approved Persons.
 Only members of the participants' and third participants' delegations who have been
authorized to have access to BCI are invited to attend the segments of the oral hearing
dedicated to questions and answers.
 Only HSBI-Approved Persons of the participants are invited to attend segments of the oral
hearing in which HSBI will be discussed.

 The third participants will have access to the BCI versions of the submissions filed in this
appeal and the BCI version of the Panel Report in the hearing room during the BCI
segments. The third participants will be provided with a single, individually watermarked
copy of these documents. Access to these documents will be limited to Third Participant
BCI-Approved Persons. These documents may not be removed from the hearing room.
10. The participants have proposed two options for addressing HSBI during the oral hearings.
The first involves interrupting the BCI segments of the oral hearing each time reference will be
made to HSBI; the second involves ha ving dedicated segments to discuss HSBI. We believe it is
important that any additional procedures to protect sensitive information should interfere as little
as possible with the regular conduct of the oral hearing and allow the Division to structure its
questioning by topic. Therefore, to the extent possible, we prefer to focus on HSBI in dedicated
segments in order to avoid interrupting the regular flow of the hearing. It may be, however, that
the full exploration of an issue will not allow for deferral of the discussion of HSBI. If such
circumstance arises, we may decide to interrupt the BCI segment of the hearing to discuss HSBI
with the HSBI-Approved Persons.
Request for public observation of the oral hearing
11. Particular issues arise in this appeal, as they did in EC and certain member States – Large
Civil Aircraft, in relation to the public observation of the oral hearing because of the need to avoid
the disclosure of BCI and HSBI. We believe that the additional procedures adopted by the
Appellate Body in EC and certain member States – Large Civil Aircraft and in US – Large Civil
Aircraft (2nd complaint) provided an appropriate means to allow public observation of the hearing,
while protecting sensitive information and safeguarding the Appellate Body's adjudicative function
and the interests of the third participants.
12. Therefore, and subject to the qualification in paragraph 13 below, we authorize public
observation of the delivery of the opening statements only. We will authorize public observation of
the closing statements upon indication from the participants and third participants that their
closing statements will not include any reference to sensitive information.
13. We authorize observation by the public of the opening statements of only those third
participants who will have indicated no objection to such observation. The confidentiality of the
closing statements by those third participants that do not wish to make their statements public will
be preserved.
14. The participants have proposed that public observation take place by making a videotape of
the relevant segments of the oral hearing and showing it to the public only after the participants
have had an opportunity to review the videotape for any inadvertent utterance of sensitive
information. A similar procedure was used in EC and certain member States – Large Civil Aircraft
and in US – Large Civil Aircraft (2 nd complaint). We agree with the participants that deferred
transmission to the public by videotape will minimize the risk of inadvertent disc losure of sensitive
information and we will give the participants an opportunity to review the videotape for this
purpose before it is shown to the public. In case of disagreement between the participants
regarding the sensitive nature of any information r eferred to during the opening or closing
statements, such information will not be subject to public observation.
15. For the reasons set out above, we adopt the following additional procedures for the conduct
of all sessions of the oral hearing to be held in this appeal:
Additional Procedures on the Conduct of the Oral Hearing
i. These Additional Procedures shall apply to all sessions of the oral hearing to be held in this
appeal and, in particular, to any information that is referred to during the course of the
hearing that was treated as business confidential information (BCI) or as highly sensitive
business information (HSBI) in the Panel proceedings and that is contained in documents or
electronic media that are part of the Panel record. These Additional Procedures complement
the Additional Procedures for the Protection of Sensitive Information that we adopted in our
Procedural Ruling of 25 October 2016.

ii. To the extent that information on the record is presented at the hearing in a form that differs
from the way in which it was presented to the Panel, and there is a disagreement between the
participants as to the proper treatment and the degree of confident iality of this information,
the Appellate Body shall decide the matter after hearing the views of the participants.
iii. Appellate Body Members, Secretariat staff assigned by the Appellate Body to work on this
appeal, and interpreters and court reporters reta ined for this appeal may be present
throughout the hearing, including segments dedicated to the discussion of BCI and HSBI.
iv. In addition to the persons indicated in paragraph iii above, BCI shall be disclosed during the
hearing only to BCI-Approved Persons of the participants and Third Participant BCI -Approved
Persons.4
v. In addition to the persons indicated in paragraph iii above, HSBI shall be disclosed during the
hearing only to HSBI-Approved Persons of the participants.5
vi. The hearing segment dedicated to th e opening statements of the participants and
third participants shall be open to all members of the delegations of the participants and
third participants. The participants and third participants shall abstain from referring to BCI or
HSBI in their opening statements.
vii. In order to protect BCI from unauthorized disclosure, only BCI -Approved Persons of the
participants and Third Participant BCI-Approved Persons are invited to attend the segments of
the hearing dedicated to questions and answers.
viii. Segments of the hearing may be reserved for questioning on issues that may require
reference to HSBI. In order to protect HSBI from unauthorized disclosure, only
HSBI-Approved Persons of the participants are invited to attend these segments.
ix. To the extent that any participant or third participant indicates that it will make reference to
BCI in its closing statement, only BCI -Approved Persons of the participants and
Third Participant BCI-Approved Persons will be invited to attend the closing segment of the
hearing.
x. If necessary, the Appellate Body Division hearing this appeal may interrupt a BCI segment
and hold a segment dedicated to HSBI.
xi. During the segments of the hearing dedicated to questions and answers, the BCI version of
the Panel Report and the BCI versions of the submissions filed in this appeal, which will be
printed and individually watermarked pursuant to paragraph xvii of our Procedural Ruling of
25 October 2016, shall be made available to each third participant. Only Third Participant
BCI-Approved Persons will be allowed to consult these documents. The documents shall not
be removed from the hearing room and shall be returned to the Appellate Body Secretariat at
the end of each segment addressing BCI.
xii. The parts of the transcript of the oral hearing conta ining BCI and HSBI shall become part of
the appellate record in this appeal and shall be kept in accordance with paragraphs vi, vii,
and ix-xii of our Procedural Ruling of 25 October 2016.
Public observation of the oral hearing
xiii. The first segment of the ora l hearing, which will consist of the opening statements by the
participants and third participants, shall be open to public observation, subject to
paragraph xv below. The final segment of the oral hearing, which will be reserved for closing
statements, sh all be open to public observation to the extent that the participants and

4 BCI-Approved Persons and Third Participant BCI-Approved Persons are those persons designated as
such under paragraphs xiv and xvi of our Procedural Ruling of 25 October 2016.
5 HSBI-Approved Persons are those persons designated as such under paragraph xiv of our Procedural
Ruling of 25 October 2016.

third participants indicate that their closing statements will not refer to any sensitive
information and subject to paragraph xiv below.
xiv. The segments open to public observation shal l be videotaped. Within two days of the
completion of each session of the hearing, either participant may request to review the
videotape to verify that no BCI or HSBI has been included inadvertently or otherwise . Upon
such request, staff of the Appellate Body Secretariat shall be present while the participant(s)
review the videotape. If the videotape contains BCI or HSBI, a redacted version of the
videotape shall be produced in which the BCI or HSBI has been deleted. In case of
disagreement between the par ticipants regarding the sensitive nature of any information
referred to during the opening or closing statements, the relevant segment(s) will not be
subject to public observation.
xv. The opening and closing statements of third participants wishing to maintai n the
confidentiality of their submissions will not be subject to public observation. Any
third participant that has not already done so may request that its oral statements remain
confidential and not be subject to public observation. Such requests must b e received by the
Appellate Body Secretariat no later than 5 p.m. Geneva time on Wednesday, 26 April 2017.
xvi. Notice of the oral hearing will be provided to the general public through the WTO website.
Members of the general public wishing to observe the oral hearing will be required to
register in advance with the WTO Secretariat. The videotapes, or if applicable the redacted
versions of the videotapes, shall be screened to WTO delegates and members of the public
who have registered to observe the oral he aring once the review process referred to in
paragraph xiv above has, if requested, been completed. The time and location of the
videotape screening shall be announced in due course. WTO delegates are invited to indicate
to the Appellate Body Secretariat no lat er than 5 p.m. Gen eva time on Wednesday,
26 April 2017 whether they wish to have a reserved seat in the room where the videotape will
be screened.