The SCM Agreement and the resolution regarding the EC and Certain Member States – Large Civil Aircraft case, as well as the US – Large Civil Aircraft case

The EC and Certain Member States – Large Civil Aircraft case (DS316) and the US – Large Civil Aircraft (2nd complaint) case (DS353) is related to the subsidy of construction of large civil aircraft and competition between Airbus and Boeing to achieve a dominant position in the market. The dispute is long-standing and is one of the most complex cases in WTO history. The roots of the dispute lie in the differences between American and European attitudes to running aviation business, and the definition of non-permissible subsidies. The author aims to analyse both the DS316 case and the DS353 case, to discuss whether the Agreement on Subsidies and Countervailing Measures (SCM Agreement) is a useful tool for finding a solution. The paper research historical facts behind the dispute, the character of the SCM Agreement and the factors which resulted in the American and European Union agreement for cooperation in the LCA sector. The dispute is political in character; however, the parties agree for suspension of payable duties for a five-year period, with possible extension. The author outlines the hypothesis that the DS316 case and the DS353 case, despite its complications, can be resolved under WTO law, but only on the basis of a settlement between the parties. The conclusion is that the solution to the dispute has been reached on the basis of Article 3.7 concerning Understanding on Rules and Procedures Governing the Settlement of Disputes (DSU). However, consensus was not reached due to an insistence on legal norms, but rather to a willingness to build a deeper economic relationship.

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