UNITED STATES – MEASURES AFFECTING TRADE IN LARGE CIVIL AIRCRAFT (SECOND COMPLAINT)
Document: Notification of an Other Appeal by the United States under Article 16.4 and Article 17 of the Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU), and under Rule 23(1) of the Working Procedures for Appellate Review
Date: 29 April 2011
Document codes: WT/DS353/10
Complainant: EU
Respondent: U.S.
Third parties: Australia, Brazil, Canada, China, Japan, South Korea
Dispute stage: Implementation & Compliance
Agreements cited: Art. 3.1, 3.2, 5, 6.3, 1.1, 2  Subsidies and Countervailing Measures (SCM)Art. III:4  GATT 1994

UNITED STATES – MEASURES AFFECTING TRADE
IN LARGE CIVIL AIRCRAFT
(SECOND COMPLAINT)

Notification of an Other Appeal by the United States

under Article 16.4 and Article 17 of the Understanding on Rules
and Procedures Governing the Settlement of Disputes (DSU),
and under Rule 23(1) of the Working Procedures for Appellate Review

 The following notification, dated 28 April 2011, from the Delegation of the United States, is
being circulated to Members.

 Pursuant to Rule 23(1) of the Working Procedures for Appellate Review , the United States
hereby notifies its decision to appeal to the Appella te Body certain issues of law covered in the report
of the Panel in
() ("Panel Report") and certain legal in terpretations developed by the Panel in this
dispute.
1. The United States seeks review by the Appella te Body of the Panel's finding that payments
made by the U.S. National Aeronautics and Space Administration ("NASA") to The Boeing Company
("Boeing") under contracts for the performance of ae ronautics research were a financial contribution.
1
This finding is in error and is based on erroneous findings on issues of law and related legal
interpretations, including an incorrect inte rpretation of Article 1.1(a)(1)(i) of the Agreement on
Subsidies and Countervailing Measures ("SCM Agreement"). The United States also requests the
Appellate Body to find that the Panel failed to ma ke "an objective assessment of the matter before it,
including an objective assessment of the facts of th e case and the applicability of and conformity with
the relevant covered agreements" as required by Article 11 of the Understanding on Rules and
Procedures Governing the Settlement of Disputes ("DSU") by disregarding evidence that research
under the NASA-Boeing contracts was of benefit and use to the U.S. government and unrelated third
parties.2 The United States also requests the Appella te Body to modify the Panel's erroneous
approach to the legal issue of the scope of the term "services".3
2. The United States seeks review by the Appella te Body of the Panel's finding that access to
NASA facilities, equipment, and employees provided to Boeing through research contracts and
agreements at issue constituted a provision of goods and services. This finding is in error and is based
on erroneous findings on issues of law and relate d legal interpretations, including an incorrect
interpretation of Article 1.1(a)(1)(iii) of the SC M Agreement. The United States also requests the

1Panel Report, para. 7.981.
2Panel Report, paras. 7.1027 and 8.3.
3Panel Report, para. 7.978.

Appellate Body to find that the Panel failed to "set out the findings of fact, the applicability of
relevant provisions and the basic rationale behind any findings and recommendations that it makes" as
required by Article 12.7 of the DSU by providing no explanation for the findings referenced in this
paragraph.
4
3. The United States seeks review by the Appella te Body of the Panel's finding that payments
made by NASA to Boeing under contracts for the performance of aeronautics research and facilities,
equipment, and employees provided to Boeing through research contracts and agreements at issue
conferred a benefit. This finding is in error and is based on err oneous findings on issues of law and
related legal interpretations, including an incorr ect interpretation of Article 1.1(b) of the
SCM Agreement.
5
4. The United States seeks review by the Appella te Body of the Panel's finding that payments
made by the U.S. Department of Defense ("Do D") under certain agreemen ts were a financial
contribution. This finding is in error and is b ased on erroneous findings on issues of law and related
legal interpretations, including an incorrect interpretation of Article 1.1(a)(1)(i) of the
SCM Agreement.6
5. The United States seeks review by the Appella te Body of the Panel's finding that access to
DoD facilities provided to Boeing under certain ag reements constitutes a provision of goods or
services. This finding is in error and is based on e rroneous findings on issues of law and related legal
interpretations, including an incorrect interpretation of Article 1.1(a)(1)(iii) of the SCM Agreement.7
6. The United States seeks review by the Appella te Body of the Panel's finding that payments
and access to facilities under certain ag reements provided a benefit. Th is finding is in error and is
based on erroneous findings on issues of law and re lated legal interpretations, including an incorrect
interpretation of Article 1.1(b) of the SCM Agreement.8 The United States also requests the Appellate
Body to find that the Panel failed to make "an obj ective assessment of the matter before it, including
an objective assessment of the f acts of the case and the applicability of and conformity with the
relevant covered agreements" as re quired by Article 11 of the DSU by concluding, without a basis in
the evidence contained in the panel record, it "does not consider it cred ible that less than 1 per cent of
the $45 billion in aeronautics R&D funding that DOD provided to Boeing over the period 1991-2005
had any potential relevance to LCA."9
7. The United States seeks review by the Appellate Body of the Panel's finding that reductions
by the state of Washington in the rates of busin ess and occupancy tax ("B&O tax") applicable to the
manufacture or making of sales, at retail or wholesale, of commercial aircraft were a financial
contribution. This finding is in error and is b ased on erroneous findings on issues of law and related
legal interpretations, including an incorrect in terpretation of Article 1.1(a)(1)(ii) of the
SCM Agreement.10
8. The United States seeks review by the Appellate Body of the Panel's finding that the B&O tax
reductions granted to the aerospace industry by the stat e of Washington was specific. This finding is

4Panel Report, paras. 7.1027 and 8.3.
5Panel Report, paras. 7.1037-7.1040 and 8.3.
6Panel Report, paras. 7.1171 and 8.3.
7Panel Report, paras. 7.1171 and 8.3.
8Panel Report, paras. 7.1185, 7.1187, and 8.3.
9Panel Report, para. 7.1205.
10Panel Report, paras. 7.133, 7.138, and 8.3.

in error and is based on erroneous findings on issues of law and related legal interpretations, including
an incorrect interpretation of Article 2.1(a) of the SCM Agreement.11
9. The United States seeks review by the Appellate Body of the Panel's finding that Boeing and
Spirit Aero Systems were granted a disproportion ately large amount of tax abatements available
through industrial revenue bonds issued by the City of Wichita. This finding is in error and is based
on erroneous findings on issues of law and relate d legal interpretations, including an incorrect
interpretation of Article 2.1(c) of the SCM Agreement.12
10. The United States seeks review by the Appellate Body of the Panel's finding that the effect of
the aeronautics research and development subsidies conferred by NASA and DoD, as described in the
Panel Report, is a threat of displacement or im pedance of exports of the European Union ("EU") 13
from third country markets, significant lost sales , and price suppression with respect to the 200-300
seat wide-body large civil aircraft product market.14 In particular, the Panel erroneously found that an
effect of the aeronautics research and development subsidies is:
(a) significant lost sales within the meaning of Article 6.3(c) of the A330 at Qantas,
Ethiopian Airlines, Icelandair, and Kenya Airways15;
(b) displacement or impedance within the m eaning of Article 6.3(b) of the A330 from the
markets of Australia, Ethiopia, Iceland, and Kenya16;
(c) significant lost sales within the meaning of Article 6.3(c) of the Original A350 at
Ethiopian Airlines, Icelandair, and Kenya Airways17;
(d) displacement or impedance within the meaning of Article 6.3(b) of the Original A350
from the markets of Ethiopia, Iceland, and Kenya18;
(e) significant price suppression with regard to the A330 in the world market 19;
(f) significant price suppression with regard to the Original A350 in the world market 20;
and
(g) significant price suppression with regard to Airbus 200-300 seat large civil aircraft in
the world market.21
These findings are in error and is based on errone ous findings on issues of law and related legal
interpretations, including an incorrect interpretati on of Articles 5(c) and 6.3(b) and (c) of the
SCM Agreement.22 The United States also requests the Appellate Body to find that the Panel failed to
make "an objective assessment of the matter before it, including an objective assessment of the facts

11Panel Report, para. 7.205 and 8.3.
12Panel Report, paras. 7.770, 7.779, and 8.3.
13In this proceeding, the United States treats the term "European Union" as synonymous with the term
"European Communities".
14Panel Report, para. 7.1797.
15Panel Report, paras. 7.1787 and 7.1794.
16Panel Report, para. 7.1791.
17Panel Report, paras. 7.1787-7.1788.
18Panel Report, para. 7.1791.
19Panel Report, para. 7.1792.
20Panel Report, para. 7.1792.
21Panel Report, para. 7.1797 and 7.1799.
22Panel Report, paras. 7.1773, 7.1780, 7.1785-7.1788, 7.1791-7.1797, and 8.3.

of the case and the applicability of and conformity with the relevant covere d agreements" as required
by Article 11 of the DSU by concluding, without a basis in the evidence contained in the panel record,
that"{t}he ability to define and manage the comple x interaction of design processes, organization and
tools so as to enable the robust development and manufacturing of an aircraft at minimum time and
cost … is a challenge that Boeing can meet th anks in large part to NASA and DOD funding and
support".
23
11. The United States seeks review by the Appellate Body of the Panel's findings:
(a) that the effect of the Foreign Sales Cor poration/Extraterritorial Income subsidies and
the Washington state B&O tax subsidies in the 100-200 seat large civil aircraft
product market were (i) to significantly suppress Airbus' prices and to cause Airbus to
lose significant sales; and (ii) to displa ce and impede EU exports from third country
markets;
(b) that the effect of the Foreign Sales Corpor ation/Extraterritorial Income subsidies, the
Washington state B&O tax subsidies, and the City of Everett B&O tax subsidies in
the 300-400 seat large civil aircraft product ma rket were (i) to significantly suppress
Airbus' prices and to cause Airbus to lose significant sales; and (ii) to displace and
impede EU exports from third country markets.
These findings are in error and are based on errone ous findings on issues of law and related legal
interpretations, including an incorrect interpretati on of Articles 5(c) and 6.3(b) and (c) of the
SCM Agreement.
24 The United States also requests the Appellate Body to find that the Panel failed to
"set out the findings of fact, the applicability of re levant provisions and the basic rationale behind any
findings and recommendations that it makes" as re quired by Article 12.7 of the DSU by issuing
generic findings of displacement or impedance "f rom third country markets" and "significant lost
sales", without stating which country markets or which sales.25

23Panel Report, para. 7.1772.
24Panel Report, paras. 7.1823, 7.1854(b)-(c), and 8.3.
25Panel Report, paras. 7.1817-7.1818 and 7.1822-7.1823.