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Boeing Woos Eu With New Offer Aerospace Giant Softens Stand In Bid To Avoid Trade War

Paul Ames Associated Press

Boeing Co. offered some concessions Tuesday in a last-ditch effort to stave off a trade war with the European Union over its purchase of McDonnell Douglas Corp.

President Clinton worked to defuse the situation as well, conducting a telephone campaign with European leaders in an effort to, initially, delay a vote today by the EU’s executive agency, which is widely expected to reject the $15 billion deal.

The European Union has argued the merger would stifle competition in aviation. A combined Boeing and McDonnell Douglas, the Europeans fear, could threaten the survival of their consortium, Airbus Industrie.

European rejection of the deal could keep the merged company out of Europe’s profitable aviation market.

In a late development Tuesday, German Foreign Minister Klaus Kinkel said Boeing had offered to further alter exclusive supply contracts with three U.S. airlines. The European Commission has taken issue with the contracts, which tie American Airlines, Delta Air Lines and Continental Airlines to Boeing as a supplier for 20 years, effectively squeezing out Airbus.

It was unclear whether the concession would be enough.

In Seattle, a Boeing spokeswoman said “it would be inappropriate” to comment on any negotiations that might be under way.

In Washington, Clinton said, “I’d like to see a resolution of this.” Secretary of State Madeleine Albright had telephoned Kinkel as part of the president’s campaign.

Nevertheless, a day ahead of the crucial vote at EU headquarters in Brussels, there seemed little give in the European position.

While the EU has no legal authority to stop the merger, it could fine Boeing up to $4 billion and block it from doing business in the lucrative trading bloc of 15 Western European nations.

In Paris, French President Jacques Chirac said his nation “wants to see a very firm line followed on this issue, which we consider as crucial for European interests.” Germany also remained opposed to the merger, said Economics Minister Guenther Rexrodt, speaking in Bonn.

EU antitrust chief Karel Van Miert drew support from foreign ministers he briefed on the merger plans. “Of course, we support him. How can we not support our own interests?” said Italian Foreign Minister Lamberto Dini.

Willy Helin, a spokesman for Van Miert, said talks with Boeing had brought progress in some areas but added there had been no face-to-face contacts since last week.

“Where’s there’s no agreement on everything, there’s no agreement on anything,” he said.

Even if Boeing and McDonnell produced a modified deal to meet EU concerns, Helin said it was probably too late for regulators to consider changes before the vote by the 20 commissioners this morning.

“In 24 hours we can do a lot, but we cannot ignore the procedures,” Helin said.

The Federal Trade Commission has approved the deal, but an EU antitrust committee has recommended that the combination be rejected as an economic threat to Europe.

U.S. officials are reportedly considering retaliatory measures in case that happens. Suggestions are said to include limiting flights between the United States and France and imposing tariffs on European airplanes.

The merger is scheduled to go ahead after shareholders from McDonnell Douglas and Boeing vote on the deal Friday.

Although little opposition is expected to the merger from shareholders, there has been speculation that a negative EU decision could lead to the vote being delayed while terms of the deal are redrawn to meet European requirements.

The highly lucrative commercial airplane business has often brought tension to trans-Atlantic trade relations.

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