WASHINGTON (AFP) - The European Union and United States moved a step closer to an aviation trade war after failing to reach agreement during talks on subsidies to Airbus Industrie.
The United States said it might now pursue a threat by President George W. Bush to take a case to the World Trade Organisation over the subsidies following talks between US Trade Representative Robert Zoellick and EU Trade Commissioner Pascal Lamy.
Subsidies have been allowed under a 1992 transatlantic accord.
Hopes of renegotiating the 1992 accord are now "dwindling" said European Commission spokesman in Washington, Anthony Gooch, following the talks between Zoellick and Lamy.
"It actually now looks as if that would be quite difficult to achieve," added Gooch. "It is now looking like it's a very long shot."
Zoellick said through a spokesman that "the status quo is unacceptable."
"We believe a new agreement is needed that creates a level playing field and ends the unfair support that Airbus receives from launch aid.
"As the president has said, we think these subsidies are unfair and we will pursue all options to end these subsidies -- including bringing a WTO case, if need be.
"We will continue to consult with domestic stakeholders and the Congress, along with officials in Europe, and we will soon make a determination as to next steps."
Bush told Boeing Co. aviation workers during a campaign rally in Seattle, Washington, August 14 that he was ready to take a case to the WTO over the subsidies.
Since its creation, Airbus has overtaken Boeing in many aviation sectors and Bush said the government payments were "unfair".
The EU spokesman said Europe would make an "immediate and prompt" response to a US complaint to the WTO. He warned it could have an impact on Boeing's planned new Dreamliner 7E7 jet.
Gooch said that Boeing still received tax breaks given to US exporters that have already been condemned by the WTO. Lamy discussed the tax breaks with US officials in Congress.
The EU spokesman was optimistic that Congress would pass new legislation on the tax breaks but said Lamy had highlighted EU concerns about a proposed transition period in the legislation.
The 25-nation EU is waiting to see the tax break law changed before lifting sanctions that were imposed after the WTO condemnation.