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Article 21.5 DSU Appellate Body Report United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint): Spillovers from Defense R&D Add to the Tug-of-War between Panels and the WTO Appellate Body

Published online by Cambridge University Press:  02 July 2021

Jennifer A. Hillman  and
Kara M. Reynolds
Jennifer A. Hillman*
Affiliation:
Practice at the Georgetown University Law Center, Washington, USA
Kara M. Reynolds*
Affiliation:
Department of Economics, American University, 4400 Massachusetts Avenue, NW, Washington, DC20016, USA
*
*Email: jhillman@cfr.org; reynolds@american.edu
*Email: jhillman@cfr.org; reynolds@american.edu
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Abstract

The March 2019 release of the Appellate Body's compliance report in United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint) marks yet another chapter in the ongoing Boeing–Airbus dispute. While raising numerous new and old subsidy issues, this paper focuses on one specific aspect, the evaluation of the financial contributions and benefits associated with the Department of Defense (DOD) R&D procurement contracts. The paper describes the differing views taken by the panels compared to the Appellate Body. It highlights two issues that led to an extremely lengthy proceeding: (1) the black or white nature of the decision regarding the characterization of contracts which have features of both purchases of services and joint ventures; and (2) the difficulty in demonstrating a financial contribution flowing from payments for R&D for military systems to Boeing's civil aircraft production. It concludes that this case represents a failure of the WTO dispute settlement system and underscores flaws in the ASCM in that after fifteen years of litigation, no determination was made as to whether or not the DOD R&D contracts examined here constituted impermissible subsidies.

Keywords

World Trade Organizationdisputessubsidies, Large Civil Aircraft
Type
Original Article
Information
World Trade Review , Volume 20 , Special Issue 4: WTO Case Law , October 2021 , pp. 466 - 478
Copyright
Copyright © The Author(s), 2021. Published by Cambridge University Press

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Footnotes

†

The views expressed in this article are the personal academic views of the authors. All errors remain ours alone

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