U.S. Mission to International
Organizations in Geneva

1.         European communities and certain member states – measures affecting trade in large civil aircraft

A.        Recourse to article 7.9 of the scm agreement and article 22.2 of the dsu by the united states (wt/ds316/18)

• On June 1, 2011, the DSB adopted its recommendations and rulings in this dispute.  The DSB recommended that the Member granting each subsidy found to have resulted in adverse effects bring the subsidy into compliance with its obligations under the SCM Agreement.  Under Article 7.9 of the SCM Agreement, the EU and certain member States had six months to withdraw the subsidies or take appropriate steps to remove the adverse effects of the subsidies.
• That six-month period ended on December 1, 2011.  The EU and the four member States at issue have not removed the adverse effects or withdrawn the subsidies within that period.
• In the absence of any agreement on compensation, the United States has requested authorization to take countermeasures at an annual level commensurate with the degree and nature of the adverse effects determined to exist, pursuant to Article 7.9 of the SCM Agreement and Article 22.2 of the DSU.  This amount corresponds to the annual value of lost sales, of exports of U.S. large civil aircraft displaced from the EU market, and of exports of U.S. large civil aircraft displaced from third country markets.
• We took this step in light of Article 22.6 of the DSU, which provides for the negative consensus rule to apply within 30 days of the end of the period for compliance.  If the EU does not object to the U.S. request, the DSB will approve the U.S. request for authorization today unless the DSB decides by consensus to reject the request.  If the EU objects, the matter is automatically referred to arbitration.
• On December 9, 2011, in order to facilitate a resolution of this dispute, the United States also requested consultations with the EU and the member States at issue with regard to this matter.  The EU has accepted our request, and consultations are scheduled for early January 2012.
• We are looking forward to those consultations.  As mentioned at the last DSB meeting, the United States remains prepared to engage in any meaningful efforts that will lead to the goal of ending subsidized financing of large civil aircraft at the earliest possible date.  We hope to find willing partners at the consultations and beyond.
• Finally, the United States notes that we are currently working with the EU on a sequencing agreement for procedures under Articles 21 and 22 of the DSU for the purposes of this dispute.  Any such agreement would be notified to the DSB.

[Second intervention:]

• The United States takes note of the EU’s objection in its statement pursuant to DSU Article 22.6.  Members will be aware of the different views of the parties on this issue.  In the U.S. view, under the terms of the DSU, the EU’s objection automatically results in the matter being referred to arbitration.
• Article 22.6 does not refer to any decision by the DSB in this regard.  Thus, there is no need today for the DSB to take any further action or decision for this matter to be referred to arbitration.
• Nevertheless, we have no objection if the DSB wishes to take note of the fact that this issue has been raised and confirm that it may not consider the U.S. request for authorization, which is the item on the agenda today, since the matter is being referred to arbitration.
• We do note that it would have been preferable had the EU objection been filed before this meeting.  The United States would then have been willing to withdraw its request in light of the referral of the matter to arbitration, and this meeting would have been canceled.  This is the procedure that was followed by Japan and the United States in the US – Zeroing (DS322) dispute.
• Nonetheless, in light of the EU’s objection today, we recognize that the DSB cannot take action on the U.S. request for authorization to take countermeasures.