EUROPEAN COMMUNITIES AND CERTAIN MEMBER STATES – MEASURES AFFECTING TRADE IN LARGE CIVIL AIRCRAFT
Document: Request for the Establishment of a Panel by the United States
Date: 3 June 2005
Document codes: WT/DS316/2
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

Request for the Establishment of a Panel by the United States

 The following communication, dated 31 May 2005, from the delegation of the United States
to the Chairman of the Dispute Settlement Body, is circulated pursuant to Article 6.2 of the DSU.

 On 6 October 2004, the United States requested consultations with the Governments of
Germany, France, the United Kingdom, and Spain (t he "member States"), and with the European
Communities ("EC"), pursuant to Articles 1 and 4 of the Understanding on Rules and Procedures
Governing the Settlement of Disputes ("DSU"), Article XXIII:1 of the General Agreement on Tariffs
and Trade 1994 ("GATT 1994"), and Articles 4, 7, and 30 of the Agreement on Subsidies and
Countervailing Measures ("SCM Agreement") (to the extent that Article 30 incorporates
Article XXIII of the GATT 1994) with regard to measu res affecting trade in large civil aircraft. The
United States held consultations with the Eu ropean Communities and the member States on
4 November 2004. These consultations provided some helpful clarifications, but unfortunately did
not resolve the dispute.

 Accordingly, the United States respectfully re quests the Dispute Settlement Body to establish
a panel pursuant to Article 6 of the DSU, Article XXIII:2 of GATT 1994, and Articles 4, 7, and 30 of
the SCM Agreement (to the extent that Article 30 incorporates by reference Article XXIII of
GATT 1994).

 The measures of the EC and the member States that are the subject of this panel request
include:

(1) The provision by the member States of financing for large civil aircraft design and
development to the Airbus companies
1 (hereinafter "launch aid"). 2 This financing provides

1 The Airbus companies, as referenced throughout this request, include Airbus SAS, its predecessor
Airbus GIE and current and predecessor affiliated companie s, including each person or entity that directly, or
indirectly through one or more intermediaries or relationships, controls or controlled, is or was controlled by, or
is or was under common control with Airbus SAS or Airbus GIE, such as parent companies, sibling companies
and subsidiaries, including Airbus Deutschland GmbH, Airbus España SL, Airbus France S.A.S., Airbus UK
Limited, European Defence and Space Company ("EADS"), and BAE Systems.
2 The EC and the member States use different terms to describe the type of financing at issue, such as
launch aid, launch investment, avances remboursables, Rückzahlbare Zuwendungen, Entwicklungsbeihilfen,
Zuschüsse zur Entwicklung von zivilen Flugzeugen, anticipo reembolsable, and prestamo reembolsable.
Although the United States will hereinafter refer to the financing as "launch aid," the U.S. request is with respect
to all such types of financing, regardless of the specific term or terms that the entity providing the financing
uses.

benefits to the recipient companies including financing for projects that would otherwise not
be commercially feasible. The non-commercia l terms of the financing may include no
interest or interest at below-market rates and a repayment obligation that is tied to sales. If
the aircraft is not successful, some or all of the financing need not be repaid. Specific
examples of the financing at issue include:

 (a) French financing for the Airbus A300, A310, A320, A330/340, A330-200,
A340-500/600, A380, and A350;

 (b) German financing for the Airbus A 300, A310, A320, A330/340, A380, and A350;

 (c) United Kingdom financing for the Airbus A300, A310, A320, A330/340,
A340-500/600, A380, and A350; and

 (d) Spanish financing for the Airbus A300, A310, A320, A330/340, A340-500/600,
A380, and A350.

(2) In addition to launch aid, the provision by the EC and the member States, through the
European Investment Bank ("EIB"), to the Air bus companies, of financing for large civil
aircraft design, development, and other purposes. Specific examples of the financing at issue
include:
3

 (a) Financing to British Aerosp ace for the A320 and the A330/A340;

 (b) Financing to Aérospatiale for the A330/340;

 (c) Financing to Construcciones Aerona uticas SA ("CASA") for the A320 and the
A330/340;

 (d) Financing to Airbus Industrie for the A321;

 (e) Financing to Aérospatia le Super Transporteurs; and

 (f) Financing to EADS for the A380.

(3) The provision by the EC and the member States of financial contributions to develop, expand,
and upgrade facilities and other infrastructure for the Airbus companies. Specific instances
include public investments by German aut horities in Hamburg, Nordenham, Bremen, and
Varel, by French authorities in the Toulouse region, by UK authorities at Broughton, and by
Spanish authorities at numerous locations in Spai n (such as Puerto Real, Illescas, Puerto de

(4) The assumption and forgiveness by the EC and the member States of debt resulting from
launch aid and other financing for large civil ai rcraft development and production, including
debt accumulated by Deutsche Airbus that was forgiven by the German government in 1997
and 1998 and debt assumed by the government of Spain on behalf of CASA and not repaid.

(5) The provision by the EC and the member St ates of equity infusions and grants, including
through government-owned and government-cont rolled banks. Examples include equity
investment by the German government through Kreditanstalt für Wiederaufbau ("KFW") in

3 EIB financing to airline customers for the purchase of new aircraft is not within the scope of this
panel request.

Deutsche Airbus in 1989 and the return of th e shares acquired through this transaction to
Deutsche Airbus' parent, the Daimler group, without compensation, in 1992; equity infusions
by the French Government into Aérospatiale in 1987 and 1988; an equity infusion by French
state-owned Crédit Lyonnais into Aérospatiale in 1992; an equity infusion by the French
Government into Aérospatiale in 1994; and th e grant by the French Government of its
45.76 per cent share of Dassault Aviation's capital to Aérospatiale in 1998.

(6) The provision by the EC and the member States of financial contributions for aeronautics-
related research, development, and demonstration ("R&D"), undertaken by Airbus, whether
alone or with others, or in any other way to the benefit of Airbus, including:

(a) EC funding for civil aeronautics-related R&D projects under the Second (1987-1991),
Third (1990-1994), Fourth (1994-1998), Fifth (1998-2002) and Sixth (2002-2006) EC
Framework Programs in which Airbus participated.
(b) Funding from the German federal governme nt and sub-federal entities for civil
aeronautics-related R&D projects in which Airbus participated, including:
(i) federal government funding as set forth in the most updated version of the
government's Förderkatalog database, including funding under the federal
aeronautics research programs Luftfahrtforschungsprogramm 1 (1995-1998),
Luftfahrtforschungsprogramm 2 (1998-2002), and
Luftfahrtforschungsprogramm 3 (2003-2007);
(ii) the regional Bremen Airbus Materials & System Technology Centre Bremen
(AMST) (2000-2002) and the Airbus Materials & System Technology Centre
Bremen II (AMST) (2002-2006);
(iii) the regional Bavaria "Hightechoffensive Bayern" program (1999-2003); and
(iv) the regional Hamburg Luftfahrtforschungsprogramm (2001-2005).
(c) Funding from the government of the United Kingdom since 1992 for civil
aeronautics-related R&D projects in which Airbus participated, including funding
under the Civil Aircraft Research and Development Program (CARAD) and the
Technology & Strategy Program.
(d) Funding from the Spanish government, including regional and local authorities, since
1993 for civil aeronautics-related R&D pr ojects in which Airbus participated,
including loans and other financial support provided under the Plan Tecnológico
Aeronáutico I and the Plan Tecnológico Aeronáutico II.
(e) Funding from the French government, including regional and local authorities, since
1986 for civil aeronautics-related R&D projects in which Airbus participated.
(f) The provision by government-controlled and financed research institutions of civil
aeronautics R&D-related goods or services to Airbus and/or funding for civil
aeronautics-related R&D projects in which Airbus participated, including by the
German Deutsches Zentrum für Luft- und Raumfahrt ("DLR"), by the UK Defence
Evaluation and Research Agency ("DERA") and its successor Qinetiq, and by the
French Office National des Études et des Recherches Aérospatiales ("ONERA"), the
Centre National de la Recherche Scientifi que ("CNRS"), and the Centre National de
la Recherche Technologique ("CNRT").

(7) Any amendments, revisions, implementing or related measures to the measures described
above.

(8) Any other measures that involve a financial contribution by the EC or any of the member
States that benefit the Airbus companies.

 The United States is concerned that the launch aid provided by the EC and the member States
to Airbus for the development of large civil ai rcraft, including but not limited to the Airbus A340-
500/600 and the A380, and the EIB loan provided to EADS for the A380, appear to be export
subsidies inconsistent with Articles 3.1(a) and 3.2 of the SCM Agreement.

 The United States further is concerned that the measures of the EC and the member States
that are the subject of this panel request appear to be causing adverse effects to its interests within the
meaning of:

• Article 5(a) of the SCM Agreement because th e measures are specific subsidies within the
meaning of Articles 1 and 2 of the SCM Agreement that are causing or threatening to cause
injury to the US industry.

• Articles 5(c), 6.3(a), 6.3(b), and 6.3(c) of the SCM Agreement because the measures are
specific subsidies within the meaning of Artic les 1 and 2 of the SCM Agreement that are
causing or threatening to cause serious prejudice to the interests of the United States through
displacement and impedance of imports of large civil aircraft of the United States into the EC
and third country markets, and through significan t price undercutting by large civil aircraft of
the EC as compared with the price of large civ il aircraft of the United States in the same
markets, and significant price suppression, price depression or lost sales in the same markets.

 The United States also is concerned that th e measures appear to be inconsistent with
Article XVI:1 of the GATT 1994.

 The United States requests that a Panel be estab lished with standard terms of reference, in
accordance with Articles 4.4 and 7.4 of the SCM Agreement and Article 7 of the DSU.

 The United States asks that this request for the establishment of a Panel be placed on the
agenda for the next meeting of the Dispute Settlement Body.

 The United States further requests that, upon estab lishment of a panel in this matter, the DSB
initiate the procedures provided for in Annex V of the SCM Agreement pursuant to paragraph 2 of
that Annex, and designate a representative to serve the function of facilitating the information-
gathering process pursuant to paragraph 4 of that Annex.