The Bush administration warned Britain that any pledge of aid to Airbus for its proposed A350 airplane may undermine negotiations to end...

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The Bush administration warned Britain that any pledge of aid to Airbus for its proposed A350 airplane may undermine negotiations to end a trans-Atlantic dispute over aircraft aid.

The London-based Times reported Monday that Airbus is pushing the U.K. to pledge it $680 million of launch aid, and in return the plane maker would keep production of its wings in Britain. The U.S. said yesterday that a pledge of that aid, even without disbursement, would further inflame the dispute.

“It would be a step in the wrong direction,” said Neena Moorjani, a spokeswoman for the U.S. Trade Representative’s Office in Washington, D.C. “Negotiations will become much harder if the U.K., or any other EU member state, commits subsidies to the A350.”

Airbus has worked for 20 months to design the A350, which will compete with Boeing’s fuel-saving 787. During that period, oil prices have more than doubled, and Boeing has received 185 orders for its aircraft.

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There was no immediate change in Britain’s position on possible loans for Airbus after Moorjani’s comments, Reuters reported. “We are considering the application we received seriously,” said a spokesman for the U.K.’s Department of Trade and Industry in London.

The U.S. and the European Union filed tit-for-tat complaints at the World Trade Organization in May over aid to their aircraft makers, Chicago-based Boeing and Toulouse, France-based Airbus. U.S. trade officials say that the loans from EU governments to Airbus, called launch aid, violate global trade rules and give Airbus an unfair advantage. The EU counters that Boeing gets unfair tax breaks, defense contracts and research help from the U.S. government.

Since the case was filed both sides have said they are open to negotiating an end to the dispute. Formal talks aren’t being held, Moorjani said.

European governments have provided up to a third of the cost of Airbus projects in the past, with the money being paid back with interest if the aircraft is a success.

Airbus, which is already spending more than 13.5 billion euros ($16.4 billion) to develop three other planes, said it will need to invest an additional 4.5 billion euros to bring the A350 to market.

It has asked the governments of France, Germany, Spain and the U.K. to provide it government loans to help it develop the aircraft.

“We are pointing out to the government the importance of the U.K. being fully involved in this new program because it moves us into composite technology on the wing,” said Howard Berry, a spokesman for Airbus in the U.K.