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Spokane, Washington  Est. May 19, 1883

Standoff May Spark Trade War Eu Opposition To Boeing Deal Draws Criticism From Clinton

Robert Burns Associated Press

President Clinton raised the specter of a trade war with Europe over its objections to the proposed merger of American giants Boeing Co. and McDonnell Douglas Corp.

“There’s an orderly process for our handling this, and I think we had better let the orderly process play itself out before we talk ourselves into a trade war,” Clinton said when asked about the dispute Thursday at a White House ceremony.

The Federal Trade Commission has approved the $15 billion merger, but an antitrust committee at European Union headquarters in Brussels recommended Wednesday that the deal be rejected as an economic threat to Europe.

The Europeans fear a Boeing-McDonnell Douglas combination could threaten the survival of Airbus Industrie, a European consortium and rival in the global airplane market. European rejection of the deal could keep the proposed company out of Europe’s profitable aviation market.

Clinton said he believes the matter still can be resolved without a trade fight but said he has “quite a lot of concern” about Europe’s stance thus far.

“We have a system for managing this through the World Trade Organization, and we have some options ourselves when actions are taken by Europe in this regard,” the president said. The allusion apparently was to retaliatory trade actions should the Europeans try to undermine the merger.

Clinton did not elaborate, but The Washington Post reported Thursday that top administration officials met Tuesday to consider possible retaliation. It said suggestions included limiting flights between the United States and France and imposing tariffs on European airplanes.

Next Wednesday is the deadline for action by the European Commission, the executive body of the European Union. It has no legal authority to stop the merger, but under European law it could fine Boeing up to $4 billion and block it from commercial dealings in all 15 European Union states.

During an appearance in the Rose Garden to announce his nomination of Army Gen. Henry Shelton to be chairman of the Joint Chiefs of Staff, Clinton was asked whether he intends to push for the Boeing-McDonnell Douglas deal even at the risk of a trade war.

“Let me say I’m concerned about what appear to be the reasons for the objection to the Boeing-McDonnell Douglas merger by the European Union, and I think that it would be unfortunate if we had a trade standoff with them,” he replied.

Later, Clinton said he he thinks a trade war can be avoided.

On Wednesday, French President Jacques Chirac called the merger “extremely dangerous” for Europe.