Europe pledged Wednesday to press on with new charges for airline carbon emissions across its airspace as of January 1, after scoring a key victory over US carriers in the EU's top court.
The decision was welcomed by the European Union, which told US airlines to get ready to obey the law in the same way EU companies respect American regulations.
But there was threat of collateral damage after US Secretary of State Hillary Clinton warned of reprisals ahead of the ruling.
The judgment "risks unleashing a trade war between Europe and the United States," a high-ranking aviation source told AFP.
The US government, while not a party to the court case brought by north American and Canadian airlines and industry bodies, said it maintained "strong legal and policy objections."
The airlines had challenged an EU decision to include as of next year all carriers in a carbon trading system targeting polluters as part of the EU's efforts against climate change.
US and Canadian carriers argued the decision was discriminatory and amounted to a backdoor tax.
But the European Court of Justice ruled that the EU's approach was "valid," and that it "infringes neither the principles of customary international law at issue nor the Open Skies Agreement" covering trans-Atlantic flights.
Despite Clinton's threat to respond with "appropriate action," the Luxembourg-based judges said that non-EU airlines could "choose" whether to make commercial flights to and from EU airports.
As a result, the EU system "infringes neither the principle of territoriality nor the sovereignty of third states, since the scheme is applicable to the operators only when their aircraft are physically in the territory of one of the member states of the EU."
Furious carriers say their inclusion in the Emissions Trading System (ETS) violates international aviation pacts, but the European Commission said after the ruling that the ETS would come into force as scheduled.
"A number of American airlines decided to challenge our legislation in court and thus abide by the rule of law," said EU climate change commissioner Connie Hedegaard.
"So now we expect them to respect European law," she underlined.
Under the EU scheme, airlines would have to pay for 15 percent of the polluting rights accorded to them in 2012, the figure then rising to 18 percent between 2013 and 2020.
In a letter to EU officials dated December 16, Clinton listed 43 nations from Argentina to Russia to Venezuela also opposed to the EU move.
"Halt or, at a minimum, delay or suspend application of this directive," she wrote. "Re-engage with the rest of the world.
"The United States stands ready to engage in such an effort. Absent such willingness on the part of the EU, we will be compelled to take appropriate action."
Krishna Urs, a top transportation official at the US State Department, said the International Civil Aviation Organisation, a UN body, was the proper arena to discuss airline emissions.
"Rather than trying to make an end run around ICAO, the EU should work with the International community to make progress in reducing aviation emissions," she said.
"The US has a number of options at its disposal that we will exercise as appropriate," Urs said, adding that Washington has required airlines to provide data related to the ETS.
"While we can't speak to any particular action, we have not taken any options off the table," she added.
In October, the US House of Representatives passed a bill directing the US government to forbid US carriers to take part "in any emissions trading scheme unilaterally established by the European Union."
Chinese and Indian airlines said earlier this year they too could launch similar cases.
Underscoring the potential for a significant trade row, China reportedly blocked an order by Hong Kong Airlines for billions of euros worth of Airbus aircraft.
Airbus and rival US planemaker Boeing have locked horns in a seven-year-long battle over government subsidies at the World Trade Organization.
by Roddy Thomson
(c) 2011 AFP
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