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

23 Pages Posted: 10 Dec 2020

See all articles by Jennifer Hillman

Jennifer Hillman

Georgetown University Law Center

Kara M. Reynolds

affiliation not provided to SSRN

Date Written: December 2020

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: Civil aircraft, Boeing-Airbus dispute, subsidies, WTO

JEL Classification: F13, L52

Suggested Citation

Hillman, Jennifer and Reynolds, Kara M., 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 (December 2020). Robert Schuman Centre for Advanced Studies Research Paper No. RSCAS 2020/89, Available at SSRN: https://ssrn.com/abstract=3745612 or http://dx.doi.org/10.2139/ssrn.3745612

Jennifer Hillman (Contact Author)

Georgetown University Law Center ( email )

600 New Jersey Avenue, NW
Washington, DC 20001
United States

Kara M. Reynolds

affiliation not provided to SSRN

No Address Available

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