Late deal expected on Boeing merger

Expectations were high in Brussels and Washington last night of a last minute deal between the US and the European Union over the proposed $14bn (pounds 8.4bn) Boeing-McDonnell Douglas merger which could prevent a trade war.

Karel Van Miert, the EU commissioner responsible for merger decisions, told European foreign ministers, meeting in Brussels, that Boeing had presented new proposals which were being urgently examined. A Commission decision to block the merger had been expected today.

Robin Cook, the Foreign Secretary, voiced optimism about a deal, saying the new proposals related to Boeing's exclusive contracts with three airlines - Delta, Continental and American - under which the carriers cannot buy from other manufacturers. The issue of exclusive contracts was one of three reasons given by the Commission for opposing the merger.

The merger would cut the number of large commercial aircraft producers from three to two, wrapping McDonnell Douglas's commercial airline operations into those of Boeing. The EU is concerned that a newly enlarged Boeing - which already accounts for 60 per cent of the sales of large commercial aircraft - would enjoy an overwhelming competitive advantage over Airbus Industrie, the European aircraft consortium.

Details of the new proposals were not immediately available, but Mr Cook said: "It remains a very real possibility that that it will be possible to reach agreement."

In the US, President Bill Clinton said he had focused on the issue over the past three days and would continue to do so. "I think there is a way to work this out. I am hopeful that by Wednesday, when the Commission meets, an agreement will have been reached."

The President said the key concern in the US was "that only the anti- trust considerations play a role in this decision and that we do everything we can to avoid a more political decision, which would lead to an unfortunate trade conflict between the United States and Europe."

The White House had previously warned that it would challenge any move by Brussels to block the merger. .

Despite the apparent breakthrough, there were still signs of tension on both sides of the Atlantic last night.

A group of 50 US Representatives from California, yesterday called on the President to keep a stiff resolve in dealing with Brussels. "The President needs to draw the line because it is clear that we are on the right side of the competition question," declared Representative Jerry Lewis.