IDEAS home Printed from https://ideas.repec.org/p/rsc/rsceui/2020-89.html
   My bibliography  Save this paper

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

Author

Listed:
  • Jennifer A. Hillman
  • Kara M. Reynolds

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.

Suggested Citation

  • Jennifer A. Hillman & Kara M. Reynolds, 2020. "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 A," RSCAS Working Papers 2020/89, European University Institute.
    • Handle: RePEc:rsc:rsceui:2020/89
    as

    Download full text from publisher

    File URL: https://cadmus.eui.eu/bitstream/handle/1814/69201/RSCAS_2020_89.pdf?sequence=1&isAllowed=y
    Download Restriction: no
    File URL: https://hdl.handle.net/1814/69201
    Download Restriction: no
    ---><---

    References listed on IDEAS

    as
    1. Horn, Henrik & Mavroidis, Petros C., 2005. "United States – Preliminary Determination with Respect to Certain Softwood Lumber from Canada: What is a Subsidy?," World Trade Review, Cambridge University Press, vol. 4(S1), pages 220-247, January.
    2. Crivelli, Pramila & Rubini, Luca, 2020. "‘Flying High in a Plane’ Appellate Body Report, European Communities and Certain Member States – Measures Affecting Trade in Large Civil Aircraft," World Trade Review, Cambridge University Press, vol. 19(2), pages 316-340, April.
    3. repec:aei:rpaper:30352 is not listed on IDEAS
    4. Grossman, Gene M. & Mavroidis, Petros C., 2003. "US – Lead and Bismuth II: United States – Imposition of Countervailing Duties on Certain Hot-Rolled Lead and Bismuth Carbon Steel Products Originating in the United Kingdom: Here Today, Gone Tomor," World Trade Review, Cambridge University Press, vol. 2(S1), pages 170-200, January.
    5. Neven, Damien & Sykes, Alan, 2014. "United States – Measures Affecting Trade in Large Civil Aircraft (Second Complaint): some comments," World Trade Review, Cambridge University Press, vol. 13(2), pages 281-298, April.
    6. Arman Avadikyan & Patrick Cohendet & Olivier Dupouet, 2005. "A Study of Military Innovation Diffusion Based on Two Case Studies," Post-Print hal-00279430, HAL.
    7. Sapir, Andre & Trachtman, Joel P., 2008. "Subsidization, price suppression, and expertise: causation and precision in Upland Cotton," World Trade Review, Cambridge University Press, vol. 7(1), pages 183-209, January.
    8. Patrick Llerena & Mireille Matt (ed.), 2005. "Innovation Policy in a Knowledge-Based Economy," Springer Books, Springer, number 978-3-540-26452-1, September.
    9. Laplane, Andrea & Mazzucato, Mariana, 2020. "Socializing the risks and rewards of public investments: Economic, policy, and legal issues," Research Policy, Elsevier, vol. 49(S).
    10. Angeleska, Sara, 2020. "United States – Measures Affecting Trade in Large Civil Aircraft – Second Complaint – Recourse to Article 21.5 of the DSU by the European Union (US – Large Civil Aircraft (2nd Complaint) (Article 21.5," World Trade Review, Cambridge University Press, vol. 19(3), pages 472-476, July.
    11. Davey, William J. & Sapir, Andrã‰, 2010. "United States – Subsidies on Upland Cotton Recourse to Article 21.5 by Brazil, WT/DS267/AB/RW (2 June 2008)," World Trade Review, Cambridge University Press, vol. 9(1), pages 181-199, January.
    12. Howse, Robert & Neven, Damien J., 2005. "United States – Tax treatment for “Foreign Sales Corporations†Recourse to Arbitration by the United States under Article 22.6 of the DSU and Article 4.11 of the SCM Agreement (WT/DS108/ARB) A Co," World Trade Review, Cambridge University Press, vol. 4(S1), pages 36-63, January.
    13. Crowley, Meredith A. & Palmeter, David, 2009. "Japan – Countervailing Duties on Dynamic Random Access Memories from Korea (DS 336 and Corr.1, adopted 17 December 2007)," World Trade Review, Cambridge University Press, vol. 8(1), pages 259-272, January.
    14. Horn, Henrik & Mavroidis, Petros C., 2006. "United States – Final Determination with Respect to Certain Softwood Lumber from Canada (AB-2003-6, WT/DS257/AB/R)," World Trade Review, Cambridge University Press, vol. 5(S1), pages 130-145, January.
    15. Carlos Martí Sempere, 2018. "What Is Known About Defence Research And Development Spill-Overs?," Defence and Peace Economics, Taylor & Francis Journals, vol. 29(3), pages 225-246, April.
    16. Arman Avadikyan & Patrick Cohendet & Olivier Dupouët, 2005. "A Study of Military Innovation Diffusion Based on Two Case Studies," Springer Books, in: Patrick Llerena & Mireille Matt (ed.), Innovation Policy in a Knowledge-Based Economy, chapter 6, pages 161-189, Springer.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Bown,Chad P. & Crowley,Meredith A & Bown,Chad P. & Crowley,Meredith A, 2016. "The empirical landscape of trade policy," Policy Research Working Paper Series 7620, The World Bank.
    2. Manuel Acosta & Daniel Coronado & Rosario Marin, 2011. "Potential Dual-Use Of Military Technology: Does Citing Patents Shed Light On This Process?," Defence and Peace Economics, Taylor & Francis Journals, vol. 22(3), pages 335-349.
    3. Manuel Acosta & Daniel Coronado & Rosario Marín & Pedro Prats, 2013. "Factors affecting the diffusion of patented military technology in the field of weapons and ammunition," Scientometrics, Springer;Akadémiai Kiadó, vol. 94(1), pages 1-22, January.
    4. Federico Caviggioli & Antonio De Marco & Giuseppe Scellato, 2020. "Investigating the capabilities and the competitiveness of the EU vis-à-vis its main competitors in developing civilian technologies with critical spillovers into the defence," JRC Research Reports JRC120293, Joint Research Centre.
    5. Grossman, Gene M. & Horn, Henrik, 2012. "Why the WTO? An Introduction to the Economics of Trade Agreements," Working Paper Series 916, Research Institute of Industrial Economics.
    6. Eugene Beaulieu & Denise Prévost, 2019. "Subsidy Determination, Benchmarks and Adverse Inferences: Assessing ‘benefit' in US – Coated Paper (Indonesia)," RSCAS Working Papers 2019/76, European University Institute.
    7. Federico Caviggioli & Antonio De Marco & Giuseppe Scellato, 2018. "Assessing the innovation capability of EU companies in developing dual use technologies," JRC Research Reports JRC113915, Joint Research Centre.
    8. Arman Avadikyan & Patrick Llerena, 2009. "Socio-technical transition processes: A real option based reasoning," Working Papers of BETA 2009-21, Bureau d'Economie Théorique et Appliquée, UDS, Strasbourg.
    9. Lee, Keun & Juma, Calestous & Mathews, John, 2014. "Innovation capabilities for sustainable development in Africa," WIDER Working Paper Series 062, World Institute for Development Economic Research (UNU-WIDER).
    10. Hylke Vandenbussche & Maurizio Zanardi, 2008. "What explains the proliferation of antidumping laws? [‘Antidumping Laws in the US; Use and Welfare Consequences’]," Economic Policy, CEPR, CESifo, Sciences Po;CES;MSH, vol. 23(53), pages 94-138.
    11. Steve Charnovitz & Carolyn Fischer, 2014. "Canada – Renewable Energy: Implications for WTO Law on Green and Not-so-Green Subsidies," Working Papers 2014.94, Fondazione Eni Enrico Mattei.
    12. Ron Boschma & Ron Martin, 2010. "The Aims and Scope of Evolutionary Economic Geography," Chapters, in: Ron Boschma & Ron Martin (ed.), The Handbook of Evolutionary Economic Geography, chapter 1, Edward Elgar Publishing.
    13. Mostafa Beshkar & Adam S. Chilton, 2015. "Revisiting Procedure and Precedent in the WTO: An Analysis of US – Countervailing and Anti-Dumping Measures (China)," RSCAS Working Papers 2015/68, European University Institute.
    14. Christoph March & Ina Schieferdecker, 2021. "Technological Sovereignty as Ability, Not Autarky," CESifo Working Paper Series 9139, CESifo.
    15. Fagerberg, Jan, 2018. "Mobilizing innovation for sustainability transitions: A comment on transformative innovation policy," Research Policy, Elsevier, vol. 47(9), pages 1568-1576.
    16. Yoguel, Gabriel & Pereira, Mariano, 2014. "Industrial and technological policy: Contributions from evolutionary perspectives to policy design in developing countries," MPRA Paper 56290, University Library of Munich, Germany.
    17. Joanna Stryjek, 2021. "Counteracting the COVID-19 Crisis with Innovation Policy Tools: A Case Study of the EU’s Supranational Innovation Policy," European Research Studies Journal, European Research Studies Journal, vol. 0(3), pages 450-468.
    18. Yuanlong Ge & Holly H. Wang & Sung K. Ahn, 2010. "Cotton market integration and the impact of China's new exchange rate regime," Agricultural Economics, International Association of Agricultural Economists, vol. 41(5), pages 443-451, September.
    19. Klochikhin, Evgeny A., 2012. "Russia's innovation policy: Stubborn path-dependencies and new approaches," Research Policy, Elsevier, vol. 41(9), pages 1620-1630.
    20. Pekka SALMI, 2012. "The Impact of Public R&D Funding on Open Innovation," Economia. Seria Management, Faculty of Management, Academy of Economic Studies, Bucharest, Romania, vol. 15(1), pages 142-163, June.

    More about this item

    Keywords

    Civil aircraft; Boeing-Airbus dispute; subsidies; WTO;
    All these keywords.

    JEL classification:

    • F13 - International Economics - - Trade - - - Trade Policy; International Trade Organizations
    • L52 - Industrial Organization - - Regulation and Industrial Policy - - - Industrial Policy; Sectoral Planning Methods

    Statistics

    Access and download statistics

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:rsc:rsceui:2020/89. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: RSCAS web unit (email available below). General contact details of provider: https://edirc.repec.org/data/rsiueit.html .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.