Europe hit back at the United States in the biggest commercial dispute in history today, reviving a lawsuit against billions of dollars in aid to aircraft giant Boeing.
The move was in retaliation for a US attack on its rival, Airbus.
European Union Trade Commissioner Peter Mandelson voiced regret at the "gladiatorial contest" pitting Boeing against its European rival, Airbus, which is now set to unfold at the World Trade Organisation (WTO).
"I am disappointed that the United States has chosen confrontation with Europe," he told reporters a day after Washington reopened its WTO case against Airbus. "The WTO has better things to do with its time than referee a grudge fight."
The showdown at the Geneva-based trade body, which may drag on until the end of 2006, could put a severe strain on transatlantic relations at a time when the two sides are trying to bury friction over the US-led invasion of Iraq.
Brussels and Washington said in a joint statement yesterday that they would not let their aviation spat affect other issues, including negotiations with developing nations on a global free trade blueprint that are due to reach a climax in December.
"I am absolutely determined to make sure that whatever blood is spilled in this aircraft dispute ... that key negotiators don't fall out over it in a way that adversely affects the (trade) round," Mr Mandelson said.
The two sides agreed in January to put competing cases filed at the WTO on ice while they sought a negotiated settlement that would eliminate subsidies enjoyed by the aviation giants.
But the talks wobbled, often amid acrimony, for months. They finally broke down yesterday after the EU announced that, to avert a WTO clash, it had offered to cut "launch investment" loans for Airbus's planned A350 airliner by around 30 per cent providing this was balanced by cuts in support to Boeing.