The EU and US on Tuesday stepped back from the brink of a damaging trade war and agreed to begin talks on ending multibillion subsidies to Airbus and Boeing, the world's largest civil plane manufacturers.
Their decision to suspend the threat of tit-for-tat litigation at the WTO, starting with three months of open-ended negotiations instead, averts a wider risk to the Doha round of global trade liberalization talks which could have been capsized by the row.
It clears the way for a more relaxed visit by US President George W. Bush to Europe next month. It also represents a substantial climbdown by the US authorities propelled into the dispute by Boeing's chief executive, Harry Stonecipher.
Airbus was due to rub salt in Boeing's wounds yesterday by announcing in Paris that it has, for the second year running, secured more deliveries of aircraft than Boeing and intends to do so for the next few years via a booming order book. It won orders for 10 freight versions of its A380 superjumbo from US carrier UPS on Tuesday.
But Tuesday's deal, brokered by EU Trade Commissioner Peter Mandelson and outgoing US Trade Representative Bob Zoellick, means Airbus will not be allowed to seek launch aid for its A350 plane from its four supporting governments -- Britain, France, Germany and Spain.
Stonecipher, who welcomed the "good faith" displayed by the EU and US, was enraged that Airbus planned to develop the A350 as a direct rival to his company's crucial 787 Dreamliner, a 250-seat "ecological" jet that will be Boeing's first new plane for two decades.
But Mandelson signalled that the EU will not easily give up government launch aid, repayable with interest: "These investments, which I don't regard as subsidies as such, are transparent and legal ... In comparison, subsidies for Boeing are opaque and indirect, via the Pentagon and Nasa and various federal and sub-federal tax subsidy programs."