PARIS, May 2: The United States and the European Union set aside a dispute over rival aircraft makers Airbus and Boeing on Monday, joining forces to haul world free trade talks back from the brink of crisis. In contrast to the rhetoric of April, when Washington and Brussels missed their deadline for a deal to cut subsidies to the aviation titans, both sides spoke of working together to secure a draft deal on the so-called Doha round by December.

“I was encouraged by the meeting, both by its seriousness and its atmospherics,” EU trade chief Peter Mandelson told Reuters after meeting new US Trade Representative Robert Portman in Paris. “He showed a real grasp of the issues and what’s needed to advance Doha.”

Their talks preceded a gathering of trade ministers from rich and poor nations in the French capital over the next two days, which follows warnings from the head of the World Trade Organization (WTO) over the slow pace of negotiations.

With just three months left for WTO states to conclude some key deals, Supachai Panitchpakdi said last week that he was beginning to have doubts that the deadline would be met.

Failure to meet the July deadline would jeopardise the chances of WTO ministers signing off on a draft deal for the round at a conference in Hong Kong in December, itself a crucial step if the negotiations are to be completed in 2006 as planned. Negotiators are bogged down over how to slash rich state farm subsidies, give developing country producers a better deal, and open up markets across the globe for consumer and industrial goods and services, such as telecommunications and tourism.

“As long as we ... have inched forward we will be happy with this week,” said a source from the European Commission, the EU’s executive arm, in Paris.

“I’m not expecting surprises and breakthroughs but we must make steady progress. Airbus-Boeing is important to resolve one way or the other, but it is not the most important.”

Portman and Mandelson touched only briefly on the dispute over aircraft manufacturers’ subsidies, which could trigger the largest commercial dispute in history if it went to the WTO.

“Mr Mandelson and Mr Portman agreed that a negotiated solution remained the most desirable option,” the EU Commission said in a statement “They agreed to continue their dialogue.”

The two sides put aside competing lawsuits in January, giving themselves 3 months to reach a deal on eliminating billions of dollars in support received by the aviation titans.

But talks broke down in March, with Mandelson and Robert Zoellick — until recently his US opposite number – accusing each other of slamming the phone down on a heated conversation.

Portman on Monday played down tensions with the EU, saying trade ties between the two economic superpowers were healthy.

“While disagreements such as the Airbus-Boeing dispute are significant and grab the headlines, our healthy $1.6 trillion transatlantic economic relationship testifies to the larger ties that bind us,” he wrote in the International Herald Tribune.

Washington took its aircraft subsidies case to the WTO first, worried that fresh “launch aid” loans from EU states for Airbus’s latest offering, the A350, could challenge Boeing’s new 787 Dreamliner, a 250-seat long-range airliner.—Reurers