This paper provides limited comments on portions of the Appellate Body (AB) judgment. With respect to the existence of a subsidy under contracts with NASA and DOD, we find the discussion of whether Boeing has received a financial contribution to be a distraction from the core issue – whether the mix of monetary compensation, access to government personnel and facilities, and IP rights ‘overcompensated’ Boeing for the services it rendered (or whether the government paid more for those services than they were worth to the government). The panel's analysis of this core issue, which focused on whether Boeing was the principal beneficiary of the contracts, is flawed, but the alternative approach of the AB is equally flawed. The analogy between an R&D joint venture and equity infusion is dubious, and the existence of a benefit simply does not turn on how one dimension of the contract (the allocation of the resulting intellectual property rights (IP)) is specified. We also argue that even a contract that confers a ‘benefit’ (or economic rent) on Boeing could still be an efficient arrangement for the allocation of cost and prospective revenues between the two partners. With respect to adverse effects, we argue that the panel and AB failed to develop an adequate counterfactual with respect to product developments; that is, it is not implausible that if Boeing had not received a subsidy and would accordingly have developed the 787 later, Airbus would also have delayed the development of the A350. To determine the existence of adverse effects, the panel and AB should have considered the profit (or sales) of Airbus relative to what would have happened in this counterfactual world. Finally, we observe that the analysis of lost sales and ‘price suppression’ fails to consider the specific features of competition in the aircraft industry. Unlike what happens in the market with posted prices, when contracts are individually negotiated, whether the outcome of competition is affected by a subsidy depends on the relative cost position of the bidders. When Boeing is the lowest cost bidder, the only effect of the subsidy is to increase its rent, with no effect on sales or prices for Airbus.

In US–COOL, the Appellate Body (AB) of the World Trade Organization (WTO) found that the US measure imposing country of origin labelling (COOL) requirements on livestock of domestic, foreign, and mixed origin was in violation of the obligation to avoid discrimination embedded in Article 2.1 of the WTO Agreement on Technical Barriers to Trade (TBT). We argue that the AB could not and should not have reached this decision based on the information available to it. The AB adopted an erroneous methodology: under its view, the consistency of a measure coming under the purview of the TBT can be examined under Article 2.1 irrespective of its evaluation under Article 2.2 thereby making the two obligations distinct. The AB also failed to address the central question raised by this dispute: Does there exist an alternative to COOL that is less trade restrictive? We argue that the over-arching issue in this case should have been to determine what, if anything, the TBT Agreement did to alter or enhance the obligation of non-discrimination that was already embedded in the arsenal of the multilateral trading rules. Unless the AB asks this question in subsequent case law pertaining to the TBT, we risk seeing repetitions of similar mistakes in the future.

The AB Report in US–Clove Cigarettes confirmed the Panel's conclusions that imported clove cigarettes were ‘like’ US menthol cigarettes, and accorded ‘less favourable treatment’ for the purpose of national treatment under Article 2.1 TBT, but it employed significantly different logic. The AB's reasoning extends earlier GATT jurisprudence into the TBT, applying competition-oriented analysis to the question of product definition, while reserving consideration of regulatory purpose to the comparison of treatment. We consider this emphasis from the perspectives of legal and economic indeterminacy, which we find run in parallel to each other. In the particular questions of the appeal, the AB's decisions are sensible from both perspectives, but ultimately do not add significantly to determinacy. We find it impossible to ignore regulatory purpose in discrimination cases, and we provide a novel economic model for analysing regulatory utility in this respect. In our view, there is not much economic difference in analysing regulatory purpose separately from more observable market considerations, but this sequencing does add political logic, analytical focus and formal transparency, all of which may enhance the legitimacy of WTO dispute settlement rulings, although ideally, further specification from the WTO Membership regarding the methodological content of the national treatment discipline would be preferred.

This case sheds light on the question whether WTO members, when exploiting their natural resources, can give priority to the needs of their domestic market as opposed to the needs of other WTO Members. From the ruling of the Appellate Body, and the unappealed part of the panel decision, one can conclude that a WTO Member normally must ensure an evenhanded distribution of the natural resources that it decides to mine or harvest amongst the WTO membership. The only difference arises where a Member's citizens or industries face a crisis because of a temporary shortage of an essential product. For those who share an international outlook on the world, this is an acceptable, and even a desirable outcome. The ruling potentially has far-reaching implications for international trade, not only in minerals and metals, but for agricultural and energy goods as well. However, in reaching this laudable result, circumscribing the use of export restrictions, the Appellate Body also made a highly regrettable finding. It ruled that China, because of the wording of its Accession Protocol, was not allowed to invoke a public policy justification for certain of its export restrictions (notably: its export duties, on which it had assumed additional commitments). The underlying assumption that sovereign states can sign away their rights to pursue public policies, such as environmental protection, which are generally admitted amongst the WTO membership, is deplorable.