The World Trade Organization (WTO) ruled on Thursday that the U.S. had continued to provide subsidies to aeroplane maker Boeing, despite the support being declared illegal in 2012.

The WTO's appellate body, which is effectively the highest court of world trade, issued a report saying that the U.S. had failed to end a number of tax measures that subsidised Boeing's production. These include programmes and incentives provided by Washington state and South Carolina, as well as measures such as the Foreign Sales Corporation and the Extraterritorial Income Exclusion.

The EU, which had said the illegal subsidies hurt sales by Airbus, Boeing's European competitor,  welcomed the ruling.

"Today's ruling is a welcome one for the EU, its aircraft-producing industry and workers across EU member states in this strategic sector," said Cecilia Malmström, the EU's Commissioner for Trade. "The appellate body has now settled this case definitively, confirming our view the U.S. has continued to subsidise Boeing despite WTO rulings to the contrary."

Malmström added that the EU will continue to defend a level playing field. "European companies must be able to compete on fair and equal terms, and today's ruling is important in this respect."

The WTO also ruled that the tax measures had harmed Airbus, Boeing's European competitor.

The U.S. also claimed victory in the ruling, saying most of the EU's claims were rejected. "European governments have provided massive subsidies to Airbus that dwarf any U.S. subsidies to Boeing," U.S. Trade Representative Robert Lighthizer said in a statement.

The ruling will allow the EU to impose retaliatory tariffs on U.S. goods and services. The level of those tariffs is based on the harm done to Airbus, and not on the amount of aid Boeing received. They potentially could total billions of dollars.

The appellate body ruling ends a long-running dispute over subsidies to aeroplane makers that started in 2005, when the European Commission, which is responsible for EU trade policy, asked the WTO for a dispute settlement panel. In 2012, the appellate body ruled that U.S. tax measures broke trade rules.

The U.S. said in 2012 that it would comply with the WTO's rulings. The commission argued that the U.S. had failed to comply and asked the WTO for the right to apply sanctions on the U.S. to offset the harm caused to European aeroplane makers.

The verdict is one of several disputes pitting Boeing against Airbus in recent years and comes as Boeing has been facing concerns over its 737 Max aircraft, following a fatal crash in Ethiopia this month and another off the coast of Indonesia last year.

It also comes at a time when a trade war is brewing between the U.S. and the EU. The Trump administration has threatened to place tariffs on European cars, and Europe has said it will not agree to U.S. demands that it open its markets to agricultural imports.