I - INTRODUCTION

Summary

1. The European Union and the United States each appeals certain issues of law and legal interpretations developed in the Panel Report, United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint) (the “Panel Report”). The Panel was established on 17 February 2006 to consider a complaint by the European Communities regarding a number of US measures affecting trade in large civil aircraft (“LCA”). The European Communities claimed that the United States has provided subsidies to US producers of LCA, namely, The Boeing Company and the McDonnell Douglas Corporation (prior to its merger with Boeing), and that such subsidies are prohibited and/or actionable under the Agreement on Subsidies and Countervailing Measures (the “SCM Agreement”).

2. The European Communities' claims before the Panel related to measures from three US States and municipalities therein, as well as to a number of US Federal Government measures, all allegedly providing subsidies to Boeing, as follows:

(a) State and local measures:

(i) State of Washington and municipalities therein: the provision of tax incentives by the State of Washington through five measures under House Bill 2294 (“House Bill 2294”); the provision of tax reductions from the City of Everett's business and occupation (“B&O”) tax pursuant to Ordinance No. 2759-04; and the provision of various incentives, including training facilities and infrastructure improvements, in connection with the production of Boeing's 787 under the Project Olympus Master Site Development and Location Agreement between the Boeing Company and the State of Washington (the “MSA”);[…]