The United States is expected to ratchet up pressure on the European Union to end subsidies for Airbus by moving at the World Trade Organization toward retaliation on European goods, an industry official and other sources said.

I'm hearing that the USTR will take the next step soon, an industry official said, referring to the WTO process for obtaining permission to retaliate, referring to the office of the U.S. Trade Representative.

An EU plan in December for ending subsidies declared illegal by the WTO had failed to satisfy either Boeing or the U.S. government, the official and other sources said.

The next step in the process is for the United States to ask the WTO for a compliance panel to assess whether European governments had ended their illegal subsidies.

That could lead to U.S. sanctions on exports from Britain, France, Germany, Spain and potentially other European nations if the WTO panel agrees the steps taken to end Airbus subsidies have been inadequate.

Washington has already said it could seek as much $7 billion to $10 billion in sanctions. The process of obtaining WTO permission could take 6 months to a year and the amount approved could be less than requested.

Many analysts expect the two sides to reach a negotiated settlement before any sanctions are imposed.

The transatlantic aircraft dispute is the world's largest trade fight, affecting more than 100,000 jobs in an aircraft market worth more than $2 trillion.

The EU has won a counter complaint against U.S. support for Boeing at the WTO, but it is several months behind the case against Airbus in the WTO process. The United States is now at the stage of deciding how to comply with the ruling.

U.S. officials argue the WTO rulings show low-interest European launch aid loans are more ingrained in Airbus' business model than the $3 billion to $4 billion in research grants and tax breaks for Boeing struck down by the WTO.

Washington calculates the WTO found European governments gave $18 billion in illegal aid to Airbus, a figure disputed by the aircraft manufacturer and the EU.

(Reporting By Doug Palmer; editing by Todd Eastham)

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