WTO Judges Fault Boeing Subsidies: Sources

(Reuters) - The World Trade Organization has broadly upheld a ruling that Boeing Co (BA.N) took billions of dollars of unfair subsidies, breathing new life into an epic trade spat that has already faulted European aid to Airbus, people familiar with the matter said.

The world's largest trade dispute, involving mutual claims of aid to the dominant planemakers, reaches a crucial point on Monday when WTO appeal judges are expected to complete a pair of investigations by publishing their verdict on aid to Boeing.

At stake is whether the world's largest planemakers can continue to benefit from alleged public aid for heavy investment in new aircraft, but most analysts say it may be years longer before the complex legal processes are finally exhausted.

The two sides accuse the other of receiving billions of dollars in sham contracts or easy loans, while potential competitors in China, Canada, Russia and Japan are closely watching the case as they prepare to break open the duopoly.

A WTO panel ruled last year that Boeing had received at least $5.3 billion in subsidies through research contracts mainly from space agency NASA as well as a series of tax breaks.

The findings followed a six-year probe into European Union claims that Boeing had received over four times that amount.

The EU filed the complaint as a counter-suit to U.S. claims that Airbus (EAD.PA) had benefited from decades of European government loans, which the WTO trade body also deemed unfair.

The United States and EU both appealed the Boeing ruling. Both sides claim the harm caused by the respective subsidies was many times their actual amounts.

People on both sides of the dispute, who asked not to be identified, told Reuters the Geneva trade court's appellate body had upheld the bulk of the findings on the Boeing aid.

An advance copy of the ruling has been delivered to both sides but the findings are being kept under wraps until their publication, expected on Monday afternoon in Geneva.

It won't change much, but there may be some changes around the edges of the decision, a U.S. source told Reuters. A European source called the ruling a victory for the EU.

The Geneva-based WTO declined to comment.

The report is likely to be adopted by the WTO on March 22.

Even if it loses the appeal, the United States is expected to claim victory over the pair of cases by highlighting what it describes as significantly higher aid provided to Airbus.

It is pressing for $7 billion to $10 billion in annual sanctions against the European Union.

Airbus, however, will try to keep the focus on the EU's tit-for-tat case against the United States and expressed confidence about this part of the dispute on Friday.

We don't expect any change on fundamentals. It should not surprise us or Boeing. There is no way they can win this case, a spokeswoman said.

A Boeing spokesman said it would not comment on the verdict ahead of the report's publication.