Measures Affecting Trade in Large Civil Aircraft
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WT/DS316/RW2 2 December 2019 (19-8221) Page: 1/138 EUROPEAN COMMUNITIES AND CERTAIN MEMBER STATES – MEASURES AFFECTING TRADE IN LARGE CIVIL AIRCRAFT RECOURSE TO ARTICLE 21.5 OF THE DSU BY THE EUROPEAN UNION AND CERTAIN MEMBER STATES REPORT OF THE PANEL BCI deleted, as indicated [***] WT/DS316/RW2 BCI deleted, as indicated [***] - 2 - TABLE OF CONTENTS 1 INTRODUCTION ....................................................................................................... 13 1.1 Prior proceedings in DS316 ........................................................................................ 13 1.2 Complaint by the European Union ............................................................................... 13 Request for consultations ........................................................................................ 13 Panel establishment and composition ....................................................................... 14 1.3 Panel proceedings ..................................................................................................... 14 General ................................................................................................................ 14 Protection of Business Confidential Information and Highly Sensitive Business Information .......................................................................................... 15 Canada's request to participate in the proceeding as a third party ................................ 15 Preliminary ruling on the Panel's terms of reference ................................................... 15 Request to file an additional submission regarding the future of the A380 LCA programme ................................................................................................. 16 Request relating to the United States' comments ....................................................... 16 2 FACTUAL ASPECTS.................................................................................................... 17 2.1 Product at issue ....................................................................................................... 17 2.2 Measures at issue ..................................................................................................... 17 3 PARTIES' REQUESTS FOR FINDINGS AND RECOMMENDATIONS ............................... 17 4 ARGUMENTS OF THE PARTIES .................................................................................. 18 5 ARGUMENTS OF THE THIRD PARTIES ....................................................................... 18 6 INTERIM REVIEW ..................................................................................................... 18 7 FINDINGS ................................................................................................................ 18 7.1 Introduction ............................................................................................................. 18 Procedural background ........................................................................................... 18 7.1.1.1 Original proceeding ............................................................................................. 18 First compliance proceeding ................................................................................. 19 Second compliance proceeding ............................................................................. 20 The Panel's task in this compliance proceeding .......................................................... 20 7.2 The European Union's 17 May 2018 compliance communication to the DSB ..................... 22 Introduction .......................................................................................................... 22 Measures alleged to achieve withdrawal of the A380 LA/MSF and A350XWB LA/MSF subsidies and to contribute to the removal of their adverse effects within the meaning of Article 7.8 of the SCM Agreement ...................................................................................... 22 The [***] amendments to the French, German, Spanish and UK A380 LA/MSF agreements (measures 1–4) ............................................................................................. 22 The [***] amendment to the German A350XWB LA/MSF agreement (measure 5) ....... 23 Repayment of outstanding UK A350XWB LA/MSF in 2018 (measure 6) ...................... 24 Withdrawal, through amortisation of the "benefit" conferred by the A380 and A350XWB LA/MSF agreements (measures 7 and 8) .............................................................. 24 Measures alleged to constitute appropriate steps to remove the adverse effects of the A380 LA/MSF and A350XWB LA/MSF subsidies within the meaning of Article 7.8 of the SCM Agreement ............................................................................................................... 25 WT/DS316/RW2 BCI deleted, as indicated [***] - 3 - Amortisation of the "benefit" conferred by the A380 LA/MSF agreements and A350XWB LA/MSF agreements (measures 9 and 14) ...................................................... 25 Non-subsidised investments in A380 and A350XWB family aircraft (measures 10 and 15) ...................................................................................................... 25 Reduced draw down of principal under the French A380 LA/MSF agreement and the French and UK A350XWB LA/MSF agreements (measures 11 and 16) ..................................... 26 Attenuation of the causal link between A380 LA/MSF and A350XWB LA/MSF and the launches of the A380 and the A350XWB due to the passage of time (measures 13 and 17) ....... 26 Cancellation or completion of A380 deliveries and pending deliveries, and the completion or conversion of A350XWB deliveries in certain country markets (measures 12 and 18) ...................................................................................................... 26 Observations regarding the European Union's measures or steps taken to achieve compliance ...................................................................................................................... 27 7.3 The European Union's request for a preliminary ruling that the United States' claims against certain research and technological development measures are outside the Panel's terms of reference ................................................................................................. 27 Procedural background ........................................................................................... 27 The R&TD measures the United States challenges in this proceeding and relevant findings from previous stages of this dispute ........................................................... 28 Whether the United States' claims against the R&TD measures are outside the Panel's terms of reference ................................................................................................. 30 Introduction ....................................................................................................... 30 Are the R&TD measures identified in the European Union's panel request? ................. 30 Do the challenged R&TD measures fall within the Panel's terms of reference, even though they are not specifically identified in the European Union's panel request? ............ 32 The United States' claims against R&TD measures that were subject to findings in the original proceedings or were in existence at the time of the first compliance proceeding ........... 36 The United States' claims against the Eighth Framework Programme ........................... 41 7.3.5.1 Timing ............................................................................................................... 43 Nature ............................................................................................................... 43 Effects ............................................................................................................... 45 7.3.6 Conclusions ........................................................................................................... 46 7.4 Whether the A350XWB and A380 LA/MSF subsidies have been withdrawn for the purpose of Article 7.8 of the SCM Agreement ....................................................................... 47 Introduction .......................................................................................................... 47 Guidance from the first compliance proceeding regarding the obligation to "withdraw" the subsidy contained in Article 7.8 of the SCM Agreement ................................... 47 The [***] amendment to the German A350XWB LA/MSF agreement ............................ 49 Main arguments of the parties .............................................................................. 49 Evaluation by the Panel ....................................................................................... 51 Features of the amended German A350XWB LA/MSF loan agreement ..................... 51 The relevant analytical framework ...................................................................... 52 Whether the [***] amendment has aligned the terms of the German A350XWB LA/MSF agreement with a market benchmark ........................................... 58 Repayment of the UK A350XWB LA/MSF loan on subsidized terms ............................... 60 Main arguments of the parties .............................................................................. 60 WT/DS316/RW2 BCI deleted, as indicated [***] - 4 - Evaluation by the Panel ......................................................................................