The transatlantic dispute over state aid for rivals Airbus and Boeing, the world's two biggest aircraft makers, is set to drag on beyond November's US presidential elections after US and European Union negotiators yesterday failed to make headway.

After a five-hour meeting, Mr John Veroneau, the senior US negotiator, said the European Commission had not indicated any willingness to end subsidies and the two sides interpreted what constituted unfair aid differently.

The dispute is likely to be high on the agenda of a meeting in Washington between Mr Robert Zoellick, the US trade representative, and Mr Pascal Lamy, the EU's Trade Commissioner, later this month.

A senior US official said this week the US needed "a very clear, near-term path to an agreement" or it would be prepared to consider taking the dispute to the World Trade Organisation.

Under pressure from Boeing and its numerous political allies in Washington, the US is seeking a new bilateral agreement with the EU that would abolish future subsidies for civil aircraft but would allow those already pledged for Airbus's A380 and Boeing's 7E7 jet.

The US wants an end to all aircraft subsidies, including direct launch aid to Airbus and so-called indirect supports that both Boeing and Airbus receive through government-backed military and civilian research programmes. While Brussels says it is willing to replace a 1992 agreement that capped but still permitted both launch aid and indirect supports, it insists that Boeing must renounce indirect support that is equivalent to any concessions Airbus might make. - (Financial Times Service)