A transatlantic trade row over subsidies to aircraft makers remains unresolved because the United States has shown no sign of wanting to negotiate, European Union trade chief Peter Mandelson said on Wednesday.
Washington has criticized EU state loans to plane maker Airbus, which has in turn accused US rival Boeing of receiving aid. The dispute was brought to the World Trade Organization (WTO) a year ago and could prove to be the international body's biggest case.
"Even now I prefer a negotiated outcome, an amicable solution, but it takes two to negotiate and if we can't find a negotiation partner then litigation would have to proceed," the 25-nation bloc's trade commissioner told reporters in Kuala Lumpur.
"The dispute between Boeing and Airbus is between two companies (that) the global market in civil aviation production is big enough to accommodate. (There was no need for) them to take the dispute either to the level of the government (or) to the World Trade Organization," Mandelson said.
The EU said on Friday it would withdraw the planned reintroduction of sanctions against the United States after the US Congress repealed tax breaks for US exporters that the WTO had ruled illegal. President George W Bush is expected to sign the tax cut legislation later on Wednesday.
The WTO had authorized the EU to reimpose a 14 percent duty on some USD$2.4 billion worth of US exports unless the United States eliminated long-disputed tax breaks for Boeing and other exporters.
European governments on Tuesday set a July 17 deadline for a decision on funding a redesign of the Airbus A350 jet, prompting a terse warning from Washington that giving Airbus more government loans would worsen the dispute and damage chances of reaching a negotiated settlement.
Airbus is considering what could be costly improvements to the A350 after it has been outsold by a rival Boeing model.
Europe says Airbus is entitled to one-third of R&D costs, currently pegged at EUR4.3 billion (USD$5.5 billion), under a 1992 agreement which Washington says is now invalid.
US Trade Representative office spokeswoman Neena Moorjani said on Tuesday: "The United States has made it clear for over two years now that launch aid for the A350 is unacceptable.
"Our position hasn't changed. Increasing the amount of launch aid already committed to the A350 only makes the problem worse," Moorjani said.
"We continue to prefer a negotiated solution, but we will litigate our WTO case to completion if necessary. One way or another, launch aid must end."
Mandelson was in Malaysia after meeting trade ministers from the Association of Southeast Asian Nations (ASEAN) in Manila earlier this week.
