De Facto Anticipated Export Subsidy under SCM Agreement: A Closer Examination of EC Large Civil Aircraft Case

Under Article 3.1(a) of Agreement on Subsidies and Countervailing Measures，“subsidies， in fact， upon anticipated export performance” are prohibited. The determination involves proving two substantive elements: (i) the granting of subsidy is “tied to”; (ii) “anticipated” exportation or export earnings. In establishing a “tie” between the grant of a subsidy and anticipated export performance， it should be proved that a subsidy would not be granted if there is no export to ensure.The second condition can be fulfilled on the basis of the mere consideration that exports might occur in the future. There is no need to demonstrate that exports will take place in the future. In EC-Measures Affecting Trade in Large Civil Aircraft Case， panel has had a more loose interpretation on the meaning of “tie to”. For the WTO members， who are new arrivals in aviation industry， this interpretation can play adverse effects in developing their aviation industries. China， as one of the emerging countries in aviation industry， should be cautious in taking subsidy measures which aim to encourage the exportation of civil aircraft. At the same time， China should play a key role in reforming and developing international subsidy regulations on civil aviation industry.