The European Union and the United States have agreed to settle their subsidy dispute over Airbus and Boeing through bilateral talks.
It means the matter will not go to the World Trade Organization.
Last year, just before the US presidential election, Washington filed a complaint with the WTO over state aid to Airbus.
That prompted an EU complaint over US support for Boeing.
European Commission President Jose Manuel Barroso said Brussels has been looking “for a compromise solution since the beginning.” There have been intensive talks over the past few days and EU Trade Commissioner Peter Mandelson said he and the US Trade Representative Robert Zoellick had been “able to agree a way forward.”
The European Commission said EU and US trade negotiators will now hold three months of discussions to try and “eliminate different types of subsidies and to establish fair market-based competition” between the world’s two biggest aircraft manufacturers.
The talks will specifically try to reduce subsidies and come up with a list of approved aid the two aircraft makers can still receive. Washington and Brussels may also have realised that launching rival lawsuits at the World Trade Organisation in Geneva might have backfired.
The WTO could well have ruled against both sides for possibly distorting competition in an already cut-throat market.