LONDON—The World Trade Organization is expected to rule Thursday that the European Union failed to adequately eliminate illegal subsidies to plane maker Airbus Group SE, according to people familiar with the finding.

The ruling in the long-running trans-Atlantic trade dispute is expected to be followed by a WTO determination the U.S. similarly didn't sufficiently address concerns about subsidies benefiting Boeing Co., the people said.

At stake are potentially billions of dollars in tariffs the U.S. and EU could be allowed to impose on each other unless the WTO's subsidy concerns are addressed. Those tariffs, which haven't yet been set and don't have to be imposed by the winning side, could be applied to trade involving products other than planes or their components.

The U.S. raised its initial objection in the Airbus case in 2004, alleging EU member states gave illegal subsidiesto the Toulouse, France-based aircraft maker. The EU quickly launched a similar case against the U.S., arguing that the U.S. illegally subsidized Boeing, the world's No. 1 plane maker by aircraft built.

"We only needed to make limited changes in European policies and practices to comply," an Airbus spokeswoman said. "We did what we needed to do, in good faith and in the agreed time frame. We will now see the result in the public release and see with the EU if there are still remaining points to address," she added.

Airbus and Boeing for years have accused the other of winning business through illegal government handouts benefiting programs such as the European plane maker's A380 superjumbo or the 787 Dreamliner made by the Chicago-based aerospace giant. Both contend the other received multibillion dollars in financial backing contravening international trade rules.

The aircraft subsidy battle has been slow to make its way through the WTO process. Some of the claims in the case go back 40 years.

Legal experts said it could be many more years before the issue is resolved. "We are not going to get done with this anytime soon," said Simon Lester, trade policy analyst at the Washington-based Cato Institute.

Mr. Lester said the compliance panel is expected to find some flaw in the actions taken by both the EU and the U.S. to address WTO subsidy concerns. "The question is the extent of the violation, but presumably there is some violation," he said.

The WTO, European Commission and Boeing declined to comment. The U.S. Trade Representative's office didn't respond to requests for comment.

The two sides settled a previous dispute over subsidies in 1992, but the U.S. walked away from that deal in 2004, arguing Airbus had an unfair advantage.

In the new round of litigation it took six years for the WTO panel to make its initial ruling that the European plane maker had benefited from illegal state aid. The same year the EU appealed the ruling. Ten months later, the appeals panel modified some of the initial findings, but still found Airbus was in receipt of subsidies.

It didn't spell out what remedial actions the EU needed to take. The EU said on Dec. 1, 2011 it had moved to address the WTO's concerns. The panel's latest ruling is set to judge whether those steps were adequate.

The WTO's verdict is expected to be followed soon by the EU's counter-case, first brought by Brussels in June 2005. The U.S. in September 2012 said it had addressed WTO concerns.

Additionally, the WTO before year-end is expected to rule on a further challenged the EU filed against subsidies it alleges Boeing has received for the 777X, its newest long-haul plane. That case was filed in late 2014, but is moving more quickly because its scope is narrower than the earlier two cases. In it the EU is challenging tax breaks Boeing has received linked to the new long-haul plane launched in November 2013.

Write to Robert Wall at robert.wall@wsj.com

 

(END) Dow Jones Newswires

September 21, 2016 20:35 ET (00:35 GMT)

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