Subsidies given by the U.S. state of Washington to Boeing are illegal, the World Trade Organization said Monday, in a huge victory for rival aircraft giant Airbus and the European Union.

A WTO panel ruled that Washington state's subsidy regime supporting production of Boeing's 777X were prohibited as they encouraged the use of domestic materials, fuelling unfair trade distortions.

Boeing expects the US to appeal the WTO decision, company representatives said Monday.

Monday's decision by the WTO was a win for the EU on behalf of Airbus, which had argued that a Washington state tax benefit to Boeing to build the 777x was an unfair subsidy.

"I fully expect this case will be appealed," said Bob Novick, an outside counsel representing Boeing, adding that a final resolution of the case might not come until early 2019.

Meanwhile, Airbus called for a global agreement to set rules for the aerospace industry in the latest round of a marathon dispute with Boeing.

"I continue to think that the only way out of the ridiculous series of disputes initiated by the U.S. is to agree on a set of globally applicable rules for the support of the civil aircraft industry, which would benefit both sides of the Atlantic," Airbus Group Chief Executive Tom Enders said in an emailed statement.

"The duopoly is no longer the framework of reference in the future," he said, noting recent support by the Quebec government for Canada's Bombardier.

In a separate statement, the EU's executive Commission called on the United States to withdraw a prohibited tax break for the new 777X jetliner following the WTO ruling.

"The panel has found that the additional massive subsidies of $5.7 billion provided by Washington state to Boeing are strictly illegal," EU Trade Commissioner Cecilia Malmstrom said.

"We expect the U.S. to respect the rules, uphold fair competition and withdraw these subsidies without any delay."

The United States has accused the European Union of failing to comply with earlier WTO rulings in a parallel case involving European government loans for Airbus.