European Communities and Certain Member States – Measures Affecting Trade in Large Civil Aircraft: Recourse to Article 21.5 of the DSU by the United States (DS316)

Third Party Oral Statement of Australia

Geneva

17 April 2013

Mr Chairman, Members of the Panel

  1. Thank you for the opportunity to present Australia's views on this dispute.
  2. This proceeding raises a number of important issues concerning the scope of proceedings under Article 21.5 of the Dispute Settlement Understanding and the appropriate steps that must be taken by a Member to comply with Article 7.8 of the Agreement on Subsidies and Countervailing Measures (SCM Agreement). Australia will make some brief remarks in relation to these issues.

Scope of these proceedings

  1. Australia agrees with the United States (US) that the Launch Aid/ Member State Finance (LA/MSF) support for the A350XWB is within this Panel's terms of reference. Australia supports the three legal bases provided by the US for the consideration by this Panel of the A350XWB LA/MSF measure1.
  2. Australia does not accept, as posited by the EU, that because the A350XWB financing agreements do not form part of the EU's compliance report as a "measure taken to comply"2 or the Appellate Body was unable to discern the presence of an "overarching measure" in the original proceedings3, that these measures do not fall within the jurisdiction of this Panel.
  3. The Appellate Body has made it clear that the limits on the scope of Article 21.5 proceedings should not allow the effective circumvention by Members of those provisions by allowing them to comply through one measure, while at the same time negating compliance through another4. In Australia's view, an overly narrow approach to Article 21.5 proceedings could undermine the effectiveness of the dispute settlement process.
  4. Australia would encourage this Panel to consider the LA/MSF measure for the A350XWB as within its terms of reference.

Compliance

  1. Under paragraph 7.8 of the Agreement on Subsidies and Countervailing Measures, the EU had six months, subsequent to the 1 June 2011 adoption of the Appellate Body and Panel Reports, to take "appropriate steps to remove the adverse effects" of the actionable subsidies identified by the Panel and the Appellate Body, or to withdraw the subsidies.
  2. In complying with this obligation, the EU was, in Australia's view, required to take affirmative action to withdraw all current subsidies to Airbus that had been found to be non-compliant, or to take affirmative action to remove the adverse effects of those subsidies5.
  3. Australia does not take a position on whether the specific actions taken by the EU are sufficient for the purposes of Article 7.8 of the SCM Agreement. In Australia's view, the role of this Panel is to determine the extent to which the EU has addressed these obligations. In examining compliance, Australia believes that where a complaining Member has shown a lack of appropriate action by the implementing Member, it will have established a prima facie case of non-compliance. The burden of demonstrating the intervening events which break the nexus between the non-compliant measures, the adverse effects, and bringing the measures into compliance should then rest with the implementing member.
  4. Mr Chairman and Members of the Panel, this concludes Australia's remarks. Thank you for the opportunity to provide these comments.