The two companies are locked in a long-running trade dispute over a market believed to be worth more than $3 trillion over the next decade. Each has complained to the WTO that the other is receiving state aid.
Last May, a WTO panel ruled on a U.S. complaint that European governments provided to Airbus, based in Toulouse, France, with $18 billion in subsidies, though not all were found to be illegal under international rules.
The European Union had hit back with allegations that Boeing got $19.1 billion in similar subsidies between 1989 and 2006.
While the WTO appeals panel did say on Monday that Boeing received illegal aid, the sums were far smaller than the EU alleged.
As usual, both sides claimed a measure of victory.
"The apellate body has now spoken in both the Airbus and Boeing cases," said Rainer Ohler, Airbus' spokesman. "Comparing the core claims made by both sides, the net outcome is clear: Boeing's cash grants are fundamentally illegal, while the system of loans to Airbus by European governments is legal and may continue. Boeing and the U.S. now will have six months to implement the WTO decision."
Boeing, however, said in a statement that the WTO ruling "slashed earlier findings of harm to Airbus from U.S. subsidies. The decision confirms that in terms of amount, effect and nature, U.S. government support to Boeing is minimal in comparison to the massive European subsidies provided Airbus."
The reaction was similar in Olympia, where Washington Gov. Chris Gregoire noted that the WTO "rejected nearly all of the European claims against Washington state. The result is that the infrastructure improvements that benefit all of our citizens, along with many of the practices we use to attract businesses to invest here, are not against WTO rules.
"The appellate body did find that the state's decision in 2003 to reduce the B&O tax rate for aerospace manufacturing companies was a subsidy to Boeing," she added. "However, the appellate body found that the program was far less harmful than the Europeans alleged."
Said U.S. Rep. Rick Laresen, D-Wash.: "Today's announcement is a validation of what I have been saying all along: Boeing has had to play on an uneven playing field as Airbus has juiced up on illegal fiscal steroids."
Now that the ruling is in, Boeing and Airbus are each required to prove they are complying with WTO rules.
Boeing emphasized that the U.S. government has already removed some $2 billion in prohibited subsidies, leaving about $3 billion still to be addressed.
The European Commission, whose complaint to the WTO was the subject of the ruling, said it welcomed the confirmation that Chicago-based Boeing also received billions of dollars in illegal subsidies.
EU Trade Commissioner Karel De Gucht called Monday's ruling vindication of the "EU's long-held claims that Boeing has received massive U.S. government handouts in the past and continues to do so today."
De Gucht said Airbus has lost $45 billion in sales due to illegal Boeing subsidies, and Boeing would not have been able to launch its 787 Dreamliner without government support.
But his counterpart, U.S. Trade Representative Ron Kirk, called the ruling "a tremendous victory for American manufacturers and workers."
Kirk said U.S. subsidies to Boeing have cost Airbus 118 lost aircraft sales, while EU subsidies for Airbus have cost Boeing 342 lost aircraft sales.
"It is now clear that European subsidies to Airbus are far larger -- by multiples -- and far more distortive than anything that the United States does for Boeing," he said.
Herald staff contributed to this report.
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