U.S. AND EC BUSINESS CONFIDENTIAL INFORMATION REDACTED United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint) (DS353) RESPONSE OF THE UNITED STATES TO THE SECOND SET OF QUESTIONS FROM THE PANEL TO THE PARTIES April 14, 2008 TABLE OF REPORTS AND OTHER DOCUMENTS Short Form Full Citation Brazil – Aircraft (Article Appellate Body Report, Brazil – Export Financing Programme 21.5) (AB) for Aircraft – Recourse by Canada to Article 21.5 of the DSU, WT/DS46/AB/RW, adopted 4 August 2000 Brazil – Aircraft (Article Panel Report, Brazil – Export Financing Programme for Aircraft 21.5 II) – Second Recourse by Canada to Article 21.5 of the DSU, WT/DS46/RW/2, adopted August 23, 2001 Brazil – Tyres (AB) Appellate Body Report, Brazil – Measures Affecting Imports of Tyres, WT/DS332/AB/R, adopted 17 December 2007 Canada – Aircraft (AB) Appellate Body Report, Canada – Measures Affecting the Export of Civilian Aircraft, WT/DS70/AB/R, adopted 20 August 1999 Canada – Aircraft (Panel) Panel Report, Canada – Measures Affecting the Export of Civilian Aircraft, WT/DS70/R, adopted 20 August 1999, as modified by the Appellate Body Report, WT/DS70 Canada – Wheat Exports Appellate Body Report, Canada – Measures Relating to Exports (AB) of Wheat and Treatment of Imported Grain, WT/DS276/AB/R, adopted 27 September 2004 Diccionario de la Lengua Real Academia Española, Diccionario de la Lengua Española, Española vigésima segunda edición (2001) EC – Asbestos (AB) Appellate Body Report, European Communities – Measures Affecting Asbestos and Products Containing Asbestos, WT/DS135/AB/R, adopted 5 April 2001 EC – Chicken Cuts (AB) Appellate Body Report, European Communities - Customs Classification of Frozen Boneless Chicken Cuts, WT/DS269/AB/R, WT/DS286/AB/R, adopted 27 September 2005 EC – DRAMS Panel Report, European Communities – Countervailing Measures on Dynamic Random Access Memory Chips from Korea, WT/DS299/R, adopted 3 August 2005 EC – Hormones (AB) Appellate Body Report, European Communities – Measures Concerning Meat and Meat Products (Hormones), WT/DS26/AB/R, WT/DS48/AB/R, adopted 13 February 1998 EC Comments on US Comments of the European Communities on the Response of the RPQ1 United States to the First Set of Questions from the Panel to the Parties (December 21, 2007) EC FWS First Written Submission of the European Communities, United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint)(DS 353) (Feb. 9, 2007) EC OS1 Oral Statement by the European Communities at the First Substantive Meeting of the Panel with the Parties – Non- Confidential Session, United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint)(DS353) (September 28, 2007) EC OS2 Non-Confidential Oral Statement by the European Communities at the Second Substantive Meeting of the Panel with the Parties – Non-Confidential Session, United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint)(DS353) (January 16, 2008) EC OS2 (conf.) Oral Statement by the European Communities at the Second Substantive Meeting of the Panel with the Parties – Confidential Session, United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint)(DS353) (January 17, 2008) EC RPQ1 Response of the European Communities to the First Set of Questions from the Panel to the Parties (December 5, 2007) EC SWS Second Written Submission of the European Communities, United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint)(DS 353) (Nov. 19, 2007) Korea – Commercial Panel Report, Korea – Measures Affecting Trade in Commercial Vessels Vessels, WT/DS273/R, adopted 11 April 2005 New Shorter Oxford The New Shorter Oxford English Dictionary on Historical English Dictionary Principles (Clarendon Press, Oxford) (1993) US – DRAMS CVD (AB) Appellate Body Report, United States – Countervailing Duty Investigation on Dynamic Random Access Memory Semiconductors (DRAMS) from Korea, WT/DS296/AB/R, adopted 20 July 2005 US – Gambling (AB) Appellate Body Report, United States – Measures Affecting the Cross-Border Supply of Gambling and Betting Services, WT/DS285/R, adopted 20 April 2005 US – Section 301 Panel Report, United States – Sections 301-310 of the Trade Act of 1974, WT/DS152/R, adopted 27 January 2000 US – Softwood Lumber Appellate Body Report, United States – Final Countervailing CVD Final (AB) Duty Determination with Respect to Certain Softwood Lumber from Canada, WT/DS257/AB/R, adopted 17 February 2004 US – Softwood Lumber Panel Report, United States – Final Countervailing Duty CVD Final (Panel) Determination with Respect to Certain Softwood Lumber from Canada, WT/DS257/R and Corr.1, adopted 17 February 2004, as modified by the Appellate Body Report, WT/DS257 US – Upland Cotton (AB) Appellate Body Report, United States - Subsidies on Upland Cotton, WT/DS267/AB/R, adopted 21 March 2005 US – Upland Cotton Panel Report, United States – Subsidies on Upland Cotton, (Panel) WT/DS267/R, adopted 21 March 2005, as modified by the Appellate Body Report, WT/DS267/AB/R US – Wool Shirts (AB) Appellate Body Report, United States – Measure Affecting Imports of Woven Wool Shirts and Blouses from India, WT/DS33/AB/R and Corr.1, adopted 23 May 1997 US Comments on EC Comments of the United States on the Response of the European RPQ1 Communities to the First Set of Questions from the Panel to the Parties (December 21, 2007) US FWS First Written Submission by the United States, United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint) (DS353) (July 6, 2007) US OS1 Oral Statement of the United States at the First Substantive Meeting of the Panel with the Parties, United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint) (DS353) (September 26, 2007) US OS2 Oral Statement of the United States at the Second Substantive Meeting of the Panel with the Parties, United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint) (DS353) (January 16, 2008) US OS2 (conf.) Confidential Oral Statement of the United States at the Second Substantive Meeting of the Panel with the Parties – Confidential Session, United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint) (DS353) (January 16, 2008) US RPQ1 Response of the United States to the First Set of Questions from the Panel to the Parties (December 5, 2007) US SWS Second Written Submission of the United States, United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint)(DS 353) (Feb. 9, 2007) U.S. AND EC BUSINESS CONFIDENTIAL INFORMATION REDACTED United States – Measures Affecting Trade Response of the United States to the Second Set of in Large Civil Aircraft (Second Complaint) (DS353) Questions from the Panel to the Parties April 14, 2008 – Page 1 I. GENERAL ISSUES A. BEST INFORMATION AVAILABLE AND ADVERSE INFERENCES 108. The United States claims that "the only basis for a Panel taking adverse inferences under the SCM Agreement is if a party fails to cooperate with information gathering under Annex V of the SCM Agreement." (US Comments on EC RPQ1, footnote 26) How does the United States reconcile that proposition with the statements found at para. 202 and footnote 128 of the Appellate Body report in Canada – Aircraft? 1. The United States made this statement as part of its response to Question 2, which sought comments regarding the EC’s request that the Panel “adopt” its assertions regarding the U.S. programs subject to this dispute as an “adverse inference.” The United States understands this request as being the EC’s proposal of a penalty in response to what the EC asserts was “non- cooperation in the information-gathering process.” The United States has shown repeatedly that the predicate of the EC’s request does not exist, as the United States has cooperated fully with all information gathering related to the EC’s claims of subsidization of large civil aircraft. The point that the United States sought to make in the statement quoted in this question is that the only basis under the SCM Agreement for punitive adverse inferences – like the ones urged by the EC – lies in Annex V. This view is fully consistent with paragraph 202 and footnote 128 of Canada – Aircraft (AB). 2. It is important to note that the “adverse inferences” discussed by the Appellate Body in Canada – Aircraft were qualitatively and quantitatively different than those sought by the EC in this dispute. Canada had refused to submit specific information in its possession that the panel requested, defending its decision with reasons that the Appellate Body subsequently found “less than persuasive.”1 Brazil had asked the Panel to take “adverse inferences” that the information in question “was in its nature or tenor, adverse to Canada and supportive of Brazil’s claim that EDC’s debt financing, at least in that particular transaction, amounted to a prohibited export subsidy.”2 The Appellate Body emphasized that the “adverse inference” that Brazil believes the Panel should have drawn is not appropriately regarded as a punitive inference in the sense of a “punishment” or “penalty” for Canada’s withholding of information. It is merely an inference which in certain circumstances could be logically or reasonably derived by a 3 panel from the facts before it. 1 Canada – Aircraft (AB), para. 196. 2 Canada – Aircraft (AB), para. 199. 3 Canada – Aircraft (AB), para. 200. U.S. AND EC BUSINESS CONFIDENTIAL INFORMATION REDACTED United States – Measures Affecting Trade Response of the United States to the Second Set of in Large Civil Aircraft (Second Complaint) (DS353) Questions from the Panel to the Parties April 14, 2008 – Page 2 The Appellate Body emphasized that a panel evaluating such an inference “should examine very closely indeed whether the full ensemble of the facts on the record reasonably permits the inference urged by one of the parties to be drawn . .”4 3. In contrast, the EC does not seek inferences “logically” or “reasonably” derived from the facts.